Ask Question
9 January, 14:52

The Sisyphean Company is considering a new project that will have an annual depreciation expense of $ 4 million. If Sisyphean's marginal corporate tax rate is 35 % and its average corporate tax rate is 30%, then what is the value of the depreciation tax shield on the company's new project?

+3
Answers (1)
  1. 9 January, 16:26
    0
    Answer: $1.4 million

    Explanation: As, in the given case we need to compute the depreciation tax shield, we will use marginal corporate tax rate instead of average corporate tax rate as it will result in additional savings to the company in the form of taxes it paid.

    Thus, shield amount can be computed as follows : -

    ($4,000,000) * (35%) = $1,400,000
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “The Sisyphean Company is considering a new project that will have an annual depreciation expense of $ 4 million. If Sisyphean's marginal ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers