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Unformatted text preview: FIN 3716 Quiz #6 1. A firm is considering a project that will increase sales by $135,000 and cash expenses by $105,000. The project will cost $120,000 and be depreciated using the straight-line method to a zero book value over the 4-year life of the project. The company has a marginal tax rate of 34 percent. What is the value of the depreciation tax shield? A. $6,000 B. $10,200 C. $13,200 D. $19,800 E. $20,000 2. Which one of the following best illustrates erosion as it relates to project analysis? A. providing both ketchup and mustard for your customer's use B. repairing the roof of your hamburger stand because of water damage C. selling less hamburgers because you also started selling hot dogs D. opting to sell French fries but not onion rings E. opting to increase your work force by hiring two part-time employees 3. Allied Partners just purchased some fixed assets that are classified as 3-year property for MACRS. The assets cost $2,400. What is the amount of the depreciation expense in year 4?...
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This note was uploaded on 12/14/2010 for the course FIN 3716 taught by Professor Fang during the Fall '10 term at LSU.
- Fall '10