The Sisyphean Company is considering a new project that will have an annual depreciation expense of $2.5 million. If Sisyphean's marginal corporate tax rate is 30%, what is the value of the depreciation tax shield on the company's new project?

Question

Quizplus · Accepted Answer

The depreciation tax shield is calculated as the depreciation expense multiplied by the tax rate: $2.5 million * 30% = $750,000.

The Sisyphean Company Is Considering a New Project That Will