Porter Trucking Is Considering Purchasing a New Asset with an Initial

Multiple Choice

Porter Trucking is considering purchasing a new asset with an initial cost of $50 000 and an estimated annual income of $19 000.Cash operating expenses are expected to be $10 000 per year.Straight-line depreciation will be used over the five-year life of the asset and salvage value of $10 000 is to be considered in computing depreciation.Assuming that the income tax rate is 40%,what is the amount of annual tax savings from depreciation? Assume the straight-line depreciation method is used for both accounting and tax purposes.

A) $3200
B) $4000
C) $4800
D) $6000