Question

If annual depreciation is $600,000 and the marginal tax rate is 35 percent, then the annual tax shield due to depreciation is

Answer 1

$210,000

Step-by-step explanation:

Calculation for annual tax shield due to depreciation

Using this formula

Annual tax shield=Annual depreciation *Marginal tax rate

Let plug in the formula

Annual tax shield=$600,000*35%

Annual tax shield=$210,000

Therefore the annual tax shield due to depreciation is $210,000