Southport Company Is Considering the Purchase of a Piece of Equipment

question 122

Multiple Choice

Southport Company is considering the purchase of a piece of equipment that costs $114,000. The equipment would be depreciated on a straight-line basis to its expected salvage value of $6,500 over its 10 years useful life. Assuming a tax rate of 40%, what is the annual amount of the depreciation tax shield provided by this investment?

• A) $10,750
• B) $6,450
• C) $4,300
• D) None of these answers is correct.

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Definitions:

Monogamous

A relationship style or system where an individual has only one partner during their lifetime or at any one time.

Psychological Traits

Enduring characteristics or behaviors that are consistent across different situations and over time.

Physical Traits

Observable characteristics of an individual's body, such as height, hair color, and facial features.

Gene Pair

Two alleles located at the same position on homologous chromosomes, contributing to a specific trait in an organism.