Use the Information for the Question(s) Below -The Depreciation Tax Shield for Shepard Industries Project in Year

question 21

Multiple Choice

Use the information for the question(s) below.
Shepard Industries is evaluating a proposal to expand its current distribution facilities. Management has projected the project will produce the following cash flows for the first two years (in millions) .
$\begin{array} { l c c } \hline \text { Year } & \mathbf { 1 } & \mathbf { 2 } \\\hline \text { Revenues } & 1200 & 1400 \\\hline \text { Operating expense } & 450 & 525 \\\hline \text { Depreciation } & 240 & 280 \\\hline \text { Increase in working capital } & 60 & 70 \\\hline \text { Capital expenditures } & 300 & 350 \\\hline \text { Marginal corporate tax rate } & 30 \% & 30 \% \\\hline\end{array}$
-The depreciation tax shield for Shepard Industries project in year 2 is closest to:

• A) $96
• B) $84
• C) $196
• D) $72

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Definitions:

Nonparametric Tests

Statistical tests used for data that does not necessarily meet the assumptions required for parametric tests, often used when data is not normally distributed.

Independent Samples

Two or more groups of samples that are not related or paired in any way, ensuring the observations in one sample do not influence the observations in another.

Nonparametric Test

A type of statistical test that does not assume a specific distribution for the data and is used for data that does not meet the assumptions of parametric tests.

Chi-square

A statistical test used to determine if a significant relationship exists between two categorical variables.