Depreciation Tax Shield sub-objective
Harris Corp. recently purchased a manufacturing facility for $2.5 million. The company will depreciate the facility by recording $125,000 of depreciation expense each year for 20 years. Harris Corp. expects that its tax rate will be 35 percent in the coming year.
Required:
What is the tax savings ( that is, the depreciation tax shield) associated with the new facility in the coming year? Look over the examples on page 169 in your textbook. Start entering your answer in A12.