The Depreciation tax shield is $28,000
Depreciation is an annual earnings tax deduction that permits you to get better the fee or different foundation of sure property over the time you use the belongings. it is an allowance for the wear and tear, deterioration, or obsolescence of the property.
An employer's depreciation fee reduces the number of profits on which taxes are based totally, as a result reducing the quantity of taxes owed. the larger the depreciation expense, the decrease the taxable profits, and the decrease a corporation's tax invoice.
TJ Industries revenue = $400,000.
Expenses = $250,000
Depreciation expenses = $80,000
Marginal tax rate = 35%
Depreciation tax shield = Depreciation expenses * Marginal tax rate
Depreciation tax shield = $80,000 * 35%
= $28,000
The answer$28,000
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