Question

A project has sales of $511,800, costs of $322,400, depreciation of $22,620, interest expense of $3,062, and a tax rate of 34 percent. What is the value of the depreciation tax shield?

Answer 1

$7,690.80

Step-by-step explanation:

The formula and the computation of the depreciation tax shield is shown below:

= Depreciation expense × tax rate

= $22,620 × 34%

= $7,690.80

For computing the depreciation tax shield we multiplied the depreciation expense with the tax rate so that the correct amount could come.

And the other information provided in the question is of no significance. So, ignored it