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

Understand the significance and calculation of the current ratio.

Recognize solvency and profitability measures in financial analysis.

Analyze the interests of shareholders towards company profitability, solvency, and marketability.

Calculate and interpret non-GAAP financial performance measures.

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Definitions:

Statutory Mandates

Legal requirements or orders enacted by a legislative body that must be followed by entities or individuals subject to its jurisdiction.

Corporate Business

An organization engaged in commercial, industrial, or professional activities, structured as a corporation providing limited liability to its owners.

Public Corporation

A company whose shares are publicly traded on a stock exchange and are owned by a wide range of investors.

Government

The system or group of people governing an organized community, often a state, and the mechanism through which political authority is exercised.