Use the Table for the Question(s)below

question 8

Multiple Choice

Use the table for the question(s) below.
-The Sisyphean Corporation is considering a new project that will have an annual depreciation expense of $2.5 million. If Sisyphean's marginal corporate tax rate is 30%, what is the value of the depreciation tax shield on the company's new project?

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

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Definitions:

Incremental Cost

The additional cost associated with producing one additional unit of output.

Carrying Receivables

The accounting practice of recognizing unpaid invoices as assets on a company's balance sheet, expected to be converted into cash within a year.

Economic Ordering Quantity

The optimal number of units to order to minimize the total costs associated with buying, delivering, and storing inventory.

Inventory Carrying Costs

Inventory carrying costs include all expenses related to holding and storing unsold goods, such as warehousing, insurance, and spoilage.