What Is the Amount of the Annual Depreciation Tax Shield

question 84

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% marginal tax rate?

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

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Definitions:

Hypothesis

A suggested explanation for an observable event, intended as an initial basis for additional exploration.

Explanandum

The subject or occurrence that is under investigation in a scientific exploration.

Auxiliary Assumptions

Additional premises or conditions presumed to be true to support an argument or theory.

Affirming The Consequent

An invalid mixed hypothetical syllogism in which the categorical premise affirms the consequent of the hypothetical premise and the conclusion affirms the antecedent.