Calculate annual depreciation tax shield is firm tax bracket

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Reference no: EM131508135

Kevin's Lawn Care Ltd. has a new mower line that can generate revenues of $100,000 per year. Direct production costs are $50,000, and the fixed costs of maintaining the lawn mower factory are $15,000 a year. The factory originally cost $1 million and is being depreciated for tax purposes over 25 years using straight-line depreciation. Calculate the annual depreciation tax shield is the firm's tax bracket is 35%.

A) None of the above

B) $350,000

C) $918,750

D) $36,750

E) $14,000

Need to Show work and have an explanation of the answer

Reference no: EM131508135

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