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that this equipment will have a usefu Markov Manufacturing recently spent $11.8 million to purchase some equipment used in the manufacture of disk drives. The firm expects life of five years, and its marginal corporate tax rate is 38%. The company plans to use straight-line depreciation. a. What is the annual depreciation expense associated with this equipment? b. What is the annual depreciation tax shield? c. Rather than straight-line depreciation, suppose Markov will use the MACRS deprecilation method for the five-year life of the property. Calculate the depreciation tax shield each year for this equipment under this accelerated depreciation schedule. d. If Markov has a choice between straight-ine and MACRS depreciation schedules, and its marginal corporate tax rate is expected to remain constant, which schedule should t choose? Why? . How might your answer to part (d) change f Markov anticipates that its marginal corporate tax rate will icrease substantialy over the next five years? Note: Assume that the equipment is put into use in year 1 a. What is the annual depreciation expense associated with this equipment? The annual depreciation expense is $ 2.36 milion. (Round to three decimal places.) b. What is the annual depreciation tax shield? The annual depreciation tax shield is $0897 million. (Round to three decimal places)

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