A Firm Plans to Purchase a $50,000 Asset That Will

question 35

Multiple Choice

A firm plans to purchase a $50,000 asset that will be depreciated straight-line over a 5-year life to a zero salvage value.What is the present value of the resulting depreciation tax shield if the tax rate is 35% and the discount rate is 10%?

• A) $10,866.67
• B) $13,267.75
• C) $17,500.00
• D) $37,908.18

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Definitions:

Publisher

An individual or company that prepares and issues books, journals, music, or other works for sale.

Equitable Remedies

Judicial orders enforcing a party to act or refrain from acting, which are granted when legal damages are not a sufficient remedy.

Plaintiff

The person or party who initiates a lawsuit (also known as an action) before a court by filing a complaint with the clerk of the court against the defendant(s). Also known as claimant or complainant.

Title VII

A part of the 1964 Civil Rights Act that forbids job discrimination on the grounds of race, color, religion, gender, or country of origin.