Which of the Following Is the Proper Calculation of a Company's

question 45

Multiple Choice

Which of the following is the proper calculation of a company's depreciation tax shield?

• A) Depreciation ÷ tax rate.
• B) Depreciation ÷ (1 - tax rate).
• C) Depreciation × tax rate.
• D) Depreciation × (1 - tax rate).
• E) Depreciation deduction + income taxes.

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Definitions:

Binding Price Ceiling

A government-imposed limit on the price of a good or service that is set below the equilibrium market price, leading to shortages.

Binding Price Ceiling

A price ceiling set below the equilibrium price, leading to a shortage of goods since demand exceeds supply at the set price.

Market Shortage

A condition in which the quantity demanded of a good exceeds the quantity supplied at the market price.

Binding Price Ceilings

Regulatory limits on the price of goods and services that are set below the market equilibrium price, causing shortages.