Use the table for the question(s)below.
-The Sisyphean Corporation 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?
A)$1 500 000
B)$750 000
C)$1 000 000
D)$1 750 000

Question

Use the table for the question(s)below. 
-The Sisyphean Corporation 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?
A)$1 500 000 
B)$750 000 
C)$1 000 000 
D)$1 750 000

Quizplus · Accepted Answer

The value of the depreciation tax shield is calculated by multiplying the depreciation expense by the marginal tax rate: $2.5 million * 30% = $750,000.

Use the Table for the Question(s)below