**Problem: Calculating Depreciation Expense**Oberon Corp is considering a project with an annual depreciation tax shield of $432,600. The company's tax rate is 20.5%. Determine the depreciation expense. The closest option is:- A. $547,795- B. $776,517- C. $2,110,244**Explanation:**To find the depreciation expense, use the formula for the depreciation tax shield:\[ \text{Depreciation Tax Shield} = \text{Depreciation Expense} \times \text{Tax Rate} \]Rearranging this formula to solve for the depreciation expense:\[ \text{Depreciation Expense} = \frac{\text{Depreciation Tax Shield}}{\text{Tax Rate}} \]Substitute the given values:\[ \text{Depreciation Expense} = \frac{432,600}{0.205} \]Calculate the result to select the closest option.

Depreciation tax shield = $ 432,600 Tax rate = 20.5%

Answered: Oberon Corp is considering a project…

Oberon Corp is considering a project with annual depreciation tax shield of 432,600. The company's tax rate is 20.5%. Depreciation expense is closest to: O A. $547,795. B. $776,517. O C. $2,110,244.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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