The Sisyphean Company Is Considering a New Project That Will

question 94

Multiple Choice

The Sisyphean Company is considering a new project that will have an annual depreciation expense of $2.5 million.If Sisyphean's marginal corporate tax rate is 40% and its average corporate tax rate is 30%,then what is the value of the depreciation tax shield on the company's new project?

• A)$750,000
• B)$1,000,000
• C)$1,500,000
• D)$1,750,000

---

Definitions:

Operational

Referring to the day-to-day activities, processes, and functionalities of a business or organization.

Rate of Interest

The percentage of a sum of money charged for its use, typically expressed as an annual rate.

Account

An arrangement with a financial institution for the deposit and withdrawal of money.

Double Your Money

A colloquial term referring to an investment strategy or opportunity that aims to increase the initial investment by 100%.