What is the value of the depreciation tax shield


Problem: A project will increase sales by $140,000 and cash expenses by $95,000. The project will cost $100,000 and be depreciated using the straight-line method to a zero book value over the 4-year life of the project. The company has a marginal tax rate of 34%. What is the value of the depreciation tax shield?

  • $8,500
  • $17,000
  • $22,500
  • $25,000
  • $37,750

Solution Preview :

Prepared by a verified Expert
Accounting Basics: What is the value of the depreciation tax shield
Reference No:- TGS01931679

Now Priced at $20 (50% Discount)

Recommended (97%)

Rated (4.9/5)