You have a depreciation expense of 

​$521 comma 000521,000 

and a tax rate of 

28 %28%. 

What is your depreciation tax​ shield?

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Part 1

The depreciation tax shield will be 

​$enter your response here. 

 ​(Round to the nearest​ dollar.)

The depreciation tax shield is calculated using the following formula:

\[
\text{Depreciation Tax Shield} = \text{Depreciation Expense} \times \text{Tax Rate}
\]

Given:
- Depreciation Expense = \$521,000
- Tax Rate = 28% = 0.28

Now, calculate:

\[
\text{Depreciation Tax Shield} = 521,000 \times 0.28 = 145,880
\]

So, the depreciation tax shield is **\$145,880**.

Would you like more details on this calculation?

Here are 5 related questions:
1. How does depreciation impact taxable income?
2. What is the difference between straight-line depreciation and accelerated depreciation methods?
3. How does a higher tax rate affect the depreciation tax shield?
4. Can the depreciation tax shield result in a negative taxable income?
5. How would different depreciation schedules (e.g., MACRS) affect the tax shield calculation?

**Tip:** Depreciation tax shields help businesses reduce taxable income, leading to potential tax savings. The larger the depreciation expense, the greater the potential shield!

You have a depreciation expense of $521,000 and a tax rate of 28%. What is your depreciation tax shield? (Round to the nearest dollar.)

Learn how to calculate the depreciation tax shield for a $521,000 expense at a 28% tax rate. Understand the formula and steps involved in determining the tax shield, which amounts to $145,880, rounded to the nearest dollar. Suitable for students in Grades 9-12.

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