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Problem 16-48 MACRS Depreciation: Present Value of Tax Shield (Section 2) (LO 16-4, 16-5) Mind Challenge, Inc., publishes innovative science textbooks for public schools. The company's management recently acquired the following two new pieces of equipment Computer-controlled printing press: cost $282,000, considered to be industrial equipment expected useful life, 12 years . Duplicating equipment to be used in the administrative offices, considered to be office equipment cost $61,500 expected useful life, six years. The company uses straight-line depreciation for book purposes and the MACRS accelerated depreciation schedule for tax purposes. The firm's tax rate is 30 percent; its after-tax hurdle rate is 10 percent. Neither machine has any salvage value Use Appendix A and Exhibit 16-9 for your reference. (Use appropriate factor(s) from the tables provided.) Required: For each of the publishing company's new pieces of equipment: 1. Prepare a schedule of the annual depreciation expenses for book purposes. 2. Determine the appropriate MACRS property class. 3. Prepare a schedule of the annual depreciation expenses for tax purposes. 4. Compute the present value of the depreciation tax shield. Complete this question by entering your answers in the tabs below. for Book Printing Office Press Equipm.. Prepare a schedule of the annual depreciation expenses for book purposes and determine the appropriate MACRS property class. (Round your "Percentage" answer to 2 decimal places (.e., .1234 should be entered as 12.34). Round your "Discount factor" to 3 decimal places. Round your final answers to whole dollar.) Straight-Line Cash Year Depreciation MACRS Depreciation Flow: Discount Present Tax Factor Value Purposes Savings 1 % = 2 3 % = 4 % = 5 % = 6 % = 7 % - 8 % = 9 10 11 12 Present value of tax shield Printing Press Office Equipment > X Year 1 3-year 33.33% 44.45 14.81 MACRS Property Class 5-year 7-year 20.00% 14.29% 32.00 24.49 19.20 17.49 11.52 12.49 11.52 8.93 5.76 8.92 10-year 10.00% 18.00 2. 3 14.40 7.41 5 11.52 9.22 6 7.37 7 8.93 6.55 8 4.46 6.55 9 6.56 10 11 6.55 3.28 "Denotes the year during which the depreciation method switches to the straight-line method Source: IRS Publication 946, entitled "How to Depreciate Property

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