How does the lessor's tax rate affect the present value of the lessor's tax shield on the CCA?
A) The lower the tax rate, the more valuable the tax shield benefit is
B) The higher the tax rate, the less valuable the tax shield benefit is
C) The higher the tax rate, the more valuable the tax shield benefit is
D) The tax rate does not affect the lessor's tax shield value

Question

Quizplus · Accepted Answer

The higher the tax rate, the more valuable the tax shield benefit is because the tax shield is calculated as the tax rate multiplied by the depreciation expense.

How Does the Lessor's Tax Rate Affect the Present Value