The Lumber Yard is considering adding a new product line that is expected to increase annual sales by $277,000 and expenses by $184,000. The project will require $93,000 in fixed assets that will be depreciated using the straight-line method to a zero book value over the 6-year life of the project. The company has a marginal tax rate of 21 percent. What is the depreciation tax shield? Multiple Choice $19,530 $9,695 $12,245 $6,440 $3,255
The Lumber Yard is considering adding a new product line that is expected to increase annual sales by $277,000 and expenses by $184,000. The project will require $93,000 in fixed assets that will be depreciated using the straight-line method to a zero book value over the 6-year life of the project. The company has a marginal tax rate of 21 percent. What is the depreciation tax shield? Multiple Choice $19,530 $9,695 $12,245 $6,440 $3,255
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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![The Lumber Yard is considering adding a new product line that is expected to increase annual sales by $277,000 and expenses by $184,000. The project
will require $93,000 in fixed assets that will be depreciated using the straight-line method to a zero book value over the 6-year life of the project. The
company has a marginal tax rate of 21 percent. What is the depreciation tax shield?
Multiple Choice
$19,530
$9,695
$12,245
$6,440
$3,255](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Ff95bb812-a5a8-48ab-82f1-c7a55aa55802%2Ffa497f6f-ec08-4d62-a20f-2aec8f241354%2Frl6d76v_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 $277,000 and expenses by $184,000. The project
will require $93,000 in fixed assets that will be depreciated using the straight-line method to a zero book value over the 6-year life of the project. The
company has a marginal tax rate of 21 percent. What is the depreciation tax shield?
Multiple Choice
$19,530
$9,695
$12,245
$6,440
$3,255
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