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Tinney & Smyth Inc. is considering the purchase of a new batch polymer-bonding machine for...

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Finance

Tinney & Smyth Inc. is considering the purchase of a new batch polymer-bonding machine for producing Crazy Rubber, a new childrens toy. The machine will increase EBITDA by $215,000 per year for the next two years. The machines purchase price is $360,000 and the salvage value at the end of two years is $46,800. The machine is classified as Class 8 with a depreciation rate of 20%. What is the depreciation tax shield in the second year of operations? Use a tax rate of 35%. Round to the nearest dollar.

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