Factors that affect the value of tax savings from depreciation include:

Question

Quizplus · Accepted Answer

All three factors - amount of depreciation, acceleration of depreciation, and marginal tax rate - have an effect on the value of tax savings from depreciation. The greater the amount of depreciation and the more accelerated it is, the greater the tax savings will be. Additionally, the marginal tax rate of the company will affect the value of the tax savings, as a higher tax rate will result in greater savings. Thus, all of the above factors should be considered when analyzing the value of tax savings from depreciation.

Factors That Affect the Value of Tax Savings from Depreciation