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What is the depreciation tax shield

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Question - The Lumber Yard is considering adding a new product line that is expected to increase annual sales by $317,000 and expenses by $216,000. The project will require $125,000 in fixed assets that will be depreciated using the straight-line method to a zero book value over the 6-year life of the project. The company has a marginal tax rate of 40 percent. What is the depreciation tax shield?

Reference no: EM133121432

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