What is the value of the depreciation tax shield in year 2 of the project?

Name: What is the value of the depreciation tax shield in year 2 of the project?
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Question

Quizplus · Accepted Answer

Since the depreciable base is $1,000,000 and the depreciation rate is 20%, the annual depreciation expense is $200,000. The depreciation tax shield is equal to the depreciation expense multiplied by the tax rate. In year 2, the depreciation tax shield is $200,000 × 34% = $68,000.

What Is the Value of the Depreciation Tax Shield in Year