Porter Trucking Is Considering Purchasing a New Asset with an Initial

question 11

Multiple Choice

Porter Trucking is considering purchasing a new asset with an initial cost of $50 000 and an estimated annual income of $19 000.Cash operating expenses are expected to be $10 000 per year.Straight-line depreciation will be used over the five-year life of the asset and salvage value of $10 000 is to be considered in computing depreciation.Assuming that the income tax rate is 40%,what is the amount of annual tax savings from depreciation? Assume the straight-line depreciation method is used for both accounting and tax purposes.

• A)$3200
• B)$4000
• C)$4800
• D)$6000

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Definitions:

Stem-And-Leaf Plot

A graphical method of displaying quantitative data that splits each value into a "stem" (the leading digit or digits) and a "leaf" (the last digit).

Frequency Distribution

A summary of how often each value occurs in a data set, typically represented in a table or as a graph.

Dotplot

A graphical display of data using dots, where each dot represents one or more observations, allowing for the visualization of the distribution of the data set.

Frequency Distribution

A tabular or graphical representation showing how often different values occur in a dataset.