The cash flow tax savings generated as a result of a firm's tax-deductible depreciation expense is called the:
A)aftertax depreciation savings.
B)depreciable basis.
C)depreciation tax shield.
D)operating cash flow.
E)aftertax salvage value.

Question

Quizplus · Accepted Answer

The cash flow tax savings generated by a firm's tax-deductible depreciation expense is referred to as the "depreciation tax shield." This represents the tax savings achieved by offsetting taxable income with depreciation expense deductions on assets purchased. Therefore, the best choice is C.

The Cash Flow Tax Savings Generated as a Result of a Firm's