Explore BrainMass

Explore BrainMass

    Value of the depreciation tax shield

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    7. A project will increase sales by $140,000 and cash expenses by $95,000. The project will cost $100,000 and be depreciated using the straight-line method to a zero book value over the 4-year life of the project. The company has a marginal tax rate of 34%. What is the value of the depreciation tax shield? (Points: 2)
    $8,500
    $17,000
    $22,500
    $25,000
    $37,750

    © BrainMass Inc. brainmass.com June 3, 2020, 10:05 pm ad1c9bdddf
    https://brainmass.com/business/accounting/214830

    Solution Preview

    A project will increase sales by $140,000 and cash expenses by $95,000. The project will cost $100,000 and be depreciated using the straight-line method to a zero book value over the 4-year life of the project. ...

    Solution Summary

    This provides the steps to calculate the Value of the depreciation tax shield

    $2.19

    ADVERTISEMENT