If Depreciation Is $100,000 and the Marginal Tax Rate Is

question 29

Multiple Choice

If depreciation is $100,000 and the marginal tax rate is 35 percent, then the tax shield due to depreciation is

• A)$35,000.
• B)$100,000.
• C)$65,000.
• D)The answer cannot be determined from the information given.

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Definitions:

Required Rate of Return

The minimal annual revenue percentage that stimulates individuals or companies to direct their funds into a particular security or undertaking.

Borrow

To take or receive something with the intention of returning it, often referring to money with an obligation to pay back the original amount plus interest.

Yearly Payments

Recurrent payments made over the span of a year, often associated with loans, leases, or annuities.

Future Value

The estimated amount of money an investment is expected to be worth in the future, taking into account a specific rate of growth or interest.