The Lumber Yard Is Considering Adding a New Product Line

question 13

Multiple Choice

The Lumber Yard is considering adding a new product line that is expected to increase annual sales by $238,000 and cash expenses by $184,000.The initial investment will require $96,000 in fixed assets that will be depreciated using the straight-line method to a zero book value over the 6-year life of the project.The company has a marginal tax rate of 32 percent.What is the annual value of the depreciation tax shield?

• A)$5,120
• B)$13,160
• C)$25,840
• D)$32,560
• E)$41,840

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Definitions:

Mental Health Facility

An institution that provides psychiatric services and support to individuals with mental health conditions.

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a meeting focused on planning, discussing, or evaluating therapeutic approaches for an individual or group.

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A body that consists of representatives appointed or elected to act or speak for others.