What Is the Amount of the Annual Depreciation Tax Shield

question 52

Multiple Choice

What is the amount of the annual depreciation tax shield for a firm with $200,000 in net income, $75,000 in depreciation expense and a 35 percent marginal tax rate?

• A)$26,250
• B)$43,750
• C)$70,000
• D)$75,000

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Definitions:

Organization

The act or process of arranging elements into a structured and coherent form, or an entity comprising multiple people working towards a common goal.

Mnemonics

Memory aids, especially those techniques that use vivid associations to enable the retrieval of information.

Organizing Material

The process of arranging or structuring information and resources in a systematic way to enhance understanding, retrieval, and use.

Memory Aids

Tools or techniques used to enhance or improve the ability to remember information.