A New Project with a Life of Four Years Will

Multiple Choice

A new project with a life of four years will increase sales by $140,000 and cash expenses by $95,000 annually.The project will cost $100,000 and will be depreciated using the Year 2018 bonus depreciation method.The company has a marginal tax rate of 21 percent.What is the value of the depreciation tax shield in Year 2?

A) $0
B) $5,250
C) $2,625
D) $3,375
E) $6,500