Jones Men's Wear Needs to Buy Some New Display Units

Jones Men's Wear needs to buy some new display units. The units cost $34,000, have a 7-year life, and will be worthless after the 7 years. The company has a tax rate of 34 percent, a cost of borrowed funds of 8 percent, and the equipment belongs in a 25 percent CCA class. The equipment can be leased for $5,200 a year. What is the amount of the depreciation tax shield in the first year?

A) $1,445
B) $1,816
C) $2,708
D) $5,440
E) $5,984