If annual lease payments for a firm are $26,000, calculate the annual tax shield of these payments, given that the marginal tax rate is 35 percent.

Question

Quizplus · Accepted Answer

To calculate the annual tax shield, we need to multiply the annual lease payments by the marginal tax rate.

Tax Shield = Annual Lease Payments x Marginal Tax Rate

Tax Shield = $26,000 x 0.35

Tax Shield = $9,100

Therefore, the annual tax shield of these payments is $9,100. Option A is the correct answer.

If Annual Lease Payments for a Firm Are $26,000, Calculate