A Project Has Sales of $600,000, Costs of $366,500, Depreciation

question 59

Multiple Choice

A project has sales of $600,000, costs of $366,500, depreciation of $34,500, interest expense of $5,500, and a tax rate of 21 percent.What is the value of the depreciation tax shield?

• A)$7,245.00
• B)$7,645.00
• C)$6,200.00
• D)$98,800.00
• E)$10,810,200.00a

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Definitions:

Binding Price Ceiling

A government-imposed maximum price on goods or services that is set below the market equilibrium price, leading to shortages.

Binding Price Floor

A government-imposed price control that sets a minimum price for a good or service above the equilibrium price, leading to excess supply.

Surplus

The excess of production or supply over demand, often leading to lower prices or wasted resources if not managed effectively.

Binding Price Floor

A government-imposed price control or limit on how low a price can be charged for a commodity, set above the equilibrium price, leading to a surplus of the product.