You Are Considering Adding a Microbrewery on to One of Your

question 26

Multiple Choice

You are considering adding a microbrewery on to one of your firm's existing restaurants.This will entail an investment of $40,000 in new equipment.This equipment will be depreciated straight line over five years.If your firm's marginal corporate tax rate is 35%,then what is the value of the microbrewery's depreciation tax shield in the first year of operation?

• A)$2800
• B)$14,000
• C)$5200
• D)$26,000

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Definitions:

Tax Payment

The process of making payments to a government authority for income earned, sales completed, or property owned.

Tax Revenue

The income that is gained by governments through taxation.

Anti-Obesity

Pertaining to efforts or measures aimed at preventing or reducing obesity through lifestyle, medical, or societal interventions.

Excise Tax

A tax applied specifically to the sale of certain goods, often including alcohol, tobacco, and fuels.