Manosteel Ltd Is Considering the Purchase of a New Machine

question 49

Multiple Choice

Manosteel Ltd is considering the purchase of a new machine for $100,000. It is to be depreciated on a straight-line basis and is estimated to have no residual value at the end of a useful life of 10 years. The tax rate is 30 per cent. What will be the annual cash tax saving in relation to depreciation expense?

• A)$3,000.
• B)$100.
• C)$300.
• D)$10,000.

---

Definitions:

Cash Disbursement

The process of paying out money from a fund or account, usually for expenses or investments.