Problem:
What is the present value at a 10% discount rate of the depreciation tax shield for a firm in the 35% tax bracket that purchases a $50,000 asset being depreciated straight-line over a 5-year life to a zero salvage value?
Note: Please explain comprehensively and give step by step solution.
A. $10,866
B. $13,268
C. $17,500
D. $37,908