A project has sales of $49,000, costs of $38,000, depreciation of $6,000, interest expense of $300,...

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Question

A project has sales of $49,000, costs of $38,000, depreciation of $6,000, interest expense of $300,...

A project has sales of $49,000, costs of $38,000, depreciation of $6,000, interest expense of $300, and a tax rate of 30 percent. What is the value of the depreciation tax shield?

a.

$1,800

b.

$1,500

c.

$4,500

d.

$4,200

e.

$1,645a.

$1,800

b.

$1,500

c.

$4,500

d.

$4,200

e.

$1,645

business finance

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Answer 1

Answer #1

The value of the depreciation tax shield

The value of the depreciation tax shield = Depreciation Expenses x Tax rate

= $6,000 x 30%

= $6,000 x 0.30

= $1,800

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Answer 2

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