Corner Market Is Considering Adding a New Product Line That

question 79

Multiple Choice

Corner Market is considering adding a new product line that is expected to increase annual sales by $418,000 and cash expenses by $337,000. The initial investment will require $390,000 in fixed assets that will be depreciated using the straight-line method to a zero book value over the six-year life of the project. Ignore bonus depreciation. The company has a marginal tax rate of 21 percent. What is the annual value of the depreciation tax shield?

• A) $13,650
• B) $13,160
• C) $27,300
• D) $163,800
• E) $136,500

---

Definitions:

Device Manager

A Windows system utility that allows users to view and control the hardware attached to the computer.

System Restore

A feature in Windows operating systems that allows users to revert their computer's state to a previous point in time, aiming to recover from system malfunctions or other problems.

PXE

Preboot Execution Environment, a protocol that allows computers to boot up and load operating systems over a network interface, bypassing the need for local storage.

Command Line PE Environment

The Command Line Preinstallation Environment refers to a lightweight operating environment that provides command-line tools for system recovery, diagnostics, and repairs.