The Sisyphean Company is considering a new project that will have an annual depreciation expense of $2.5 million.If Sisyphean's corporate tax rate is 21%,then what is the value of the depreciation tax shield on their new project?
A)$750,000
B)$525,000
C)$1,500,000
D)$1,750,000

Question

Quizplus · Accepted Answer

The value of the depreciation tax shield can be calculated using the formula:
Depreciation tax shield = Depreciation expense x Corporate tax rate
= $2.5 million x 0.21
= $525,000
Therefore, the value of the depreciation tax shield on the new project is $525,000. Option B is the correct answer.

The Sisyphean Company Is Considering a New Project That Will