Question: Lumber Yard is considering adding a new product line that is expected to increase annual sales by $392,000 and expenses by $276,000. The project will

Lumber Yard is considering adding a new product line that is expected to increase annual sales by $392,000 and expenses by $276,000. The project will require $185,000 of fixed assets to be depreciated using the straight-line method to zero book value over the 9-year life of the project. The company's marginal tax rate is 40 percent.

What is a depreciation tax shield?

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