The Sisyphean Company is considering a new project that will have an annual depreciation expense of $3.7 million. If Sisyphean's marginal corporate tax rate is 20% and its average corporate tax rate is 30%, then what is the value of the depreciation tax shield on the company's new project? A. $740,000 B. $666,000 C. $1,110,000 D. $1,295,000 ...

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 6P
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The Sisyphean Company is considering a new project that will have an annual depreciation
expense of $3.7 million. If Sisyphean's marginal corporate tax rate is 20% and its average
corporate tax rate is 30%, then what is the value of the depreciation tax shield on the company's
new project?
A. $740,000
B. $666,000
C. $1,110,000
D. $1,295,000
Transcribed Image Text:The Sisyphean Company is considering a new project that will have an annual depreciation expense of $3.7 million. If Sisyphean's marginal corporate tax rate is 20% and its average corporate tax rate is 30%, then what is the value of the depreciation tax shield on the company's new project? A. $740,000 B. $666,000 C. $1,110,000 D. $1,295,000
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