The Lumber Yard is considering adding a new product line that is expected to increase annual sales by $352,000 and expenses by $244,000. The project will require $153,000 in fixed assets that will be depreciated using the straight-line method to a zero book value over the 9-year life of the project. The company has a marginal tax rate of 21 percent. What is the depreciation tax shield? Multiple Choice $20,145 $3,570 $0.213 D
The Lumber Yard is considering adding a new product line that is expected to increase annual sales by $352,000 and expenses by $244,000. The project will require $153,000 in fixed assets that will be depreciated using the straight-line method to a zero book value over the 9-year life of the project. The company has a marginal tax rate of 21 percent. What is the depreciation tax shield? Multiple Choice $20,145 $3,570 $0.213 D
Chapter10: Project Cash Flows And Risk
Section: Chapter Questions
Problem 6PROB
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![The Lumber Yard is considering adding a new product line that is expected to increase annual sales by $352,000 and expenses by $244,000. The
project will require $153,000 in fixed assets that will be depreciated using the straight-line method to a zero book value over the 9-year life of the project.
The company has a marginal tax rate of 21 percent. What is the depreciation tax shield?
Multiple Choice
O $20,145
$3,570
$8.213
$22.680
ER 540](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F40382791-f4ed-4b91-a5bb-fb2a9266cafa%2F8aaccc38-6990-4439-b694-5be4219cf570%2Fppwcpt6_processed.jpeg&w=3840&q=75)
Transcribed Image Text:The Lumber Yard is considering adding a new product line that is expected to increase annual sales by $352,000 and expenses by $244,000. The
project will require $153,000 in fixed assets that will be depreciated using the straight-line method to a zero book value over the 9-year life of the project.
The company has a marginal tax rate of 21 percent. What is the depreciation tax shield?
Multiple Choice
O $20,145
$3,570
$8.213
$22.680
ER 540
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