Wable Inc Has Provided the Following Data to Be Used in in Evaluating

question 21

Multiple Choice

Wable Inc. has provided the following data to be used in evaluating a proposed investment project: For tax purposes, the entire initial investment without any reduction for salvage value will be depreciated over 5 years. The company uses a discount rate of 16%.
-When computing the net present value of the project, what is the annual amount of the depreciation tax shield? In other words, by how much does the depreciation deduction reduce taxes each year in which the depreciation deduction is taken?

• A) $27,500
• B) $77,000
• C) $33,000
• D) $64,167

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Definitions:

Statistic

A numerical value that summarizes or describes a characteristic of a sample of data.

Permutation Test

A nonparametric method to determine statistical significance by computing all possible arrangements of observed data.

Two-Sample T Test

A statistical method used to compare the means of two independent samples to determine if there is a significant difference between them.

P-values

The probability of obtaining an effect at least as extreme as the one in your sample data, assuming the null hypothesis is true, used in hypothesis testing.