Kane Company Is in the Process of Purchasing a New

Multiple Choice

Kane Company is in the process of purchasing a new machine for its production line. It is near the end of the year, and the machine is being offered at a special discount if purchased before the end of the year. Kane has determined that the depreciation deduction for tax purposes on the new machine for the year of purchase would be $13,000. The tax rate is 30%. If Kane purchases the machine and reports a positive net operating income for the year, then the tax savings from the deprecation tax shield related to this machine for the year of purchase would be:

A) $3,900
B) $9,100
C) $13,000
D) $0