Seeing Red has a new project that will require fixed assets of $903,000, which will be...
Seeing Red has a new project that will require fixed assets of $903,000, which will be depreciated on a 5-year MACRS schedule. The annual depreciation percentages are 20.00 percent, 32.00 percent, 19.20 percent, 11.52 percent, and 11.52 percent, respectively. The company has a tax rate of 40 percent. What is the depreciation tax shield for Year 3?
-
$115,584
-
$41,610
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$60,200
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$72,240
-
$69,350
Homework Answers
Depreciation for year 3=$903000*Depreciation rate for year 3
=$903000*19.2%=$173376
Hence depreciation tax shield=Depreciation for year 3*Tax Rate
=$173376*40%
=$69350(Approx).
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