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:

2 × 2 Factorial ANOVA

A special case of factorial ANOVA that tests the effect of two independent variables, each having two levels, on a continuous dependent variable.

SES

Socioeconomic status, typically referring to an individual's or group's economic and social position in relation to others, based on income, education, and occupation.

2 × 2 ANOVA

A two-way analysis of variance test that involves two independent variables, each with two levels, used to determine their effect on a dependent variable.

Compounded Annually

A method of calculating interest where the interest earned each year is added to the principal, and in the next year, interest is earned on the new principal sum.