You Are Considering Adding a Microbrewery on to One of Your

question 88

Multiple Choice

You are considering adding a microbrewery on to one of your firm's existing restaurants.This will entail an investment of $40,000 in new equipment.This equipment will be depreciated straight line over five years.If your firm's marginal corporate tax rate is 21%,then what is the value of the microbrewery's depreciation tax shield in the first year of operation?

• A)$1680
• B)$14,000
• C)$5200
• D)$26,000

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Definitions:

Epinephrine

A hormone and neurotransmitter, also known as adrenaline, that increases heart rate, constricts blood vessels, and dilates air passages in response to stress.

Glucagon Release

The process in which glucagon, a hormone that raises blood glucose levels, is secreted by the alpha cells of the pancreas in response to low blood sugar.

Pancreas

An organ in the digestive system and endocrine system, responsible for secreting digestive enzymes and insulin.

Acinar Cells

Cells in the pancreas that produce digestive enzymes, which are secreted into the small intestine to aid in the digestion of food.