Shepard Industries is evaluating a proposal to expand its current distribution facilities Management has projected the project will produce the following cash flows for the first two years (in millions) Year 1 2 Revenues 1,100 1,425 Operating expense 425 550 Depreciation 230 270 Increase in working capital 60 70 Capital expenditures 270 320 Corporate tax rate 20 20 The depreciation tax shield for Shepard Industries project in year 1 is closest to A $69 B $46 C $55 D $54

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Question: Shepard Industries is evaluating a proposal to expand its current distribution facilities. Management has projected the project will produce the following cash flows for the

Shepard Industries is evaluating a proposal to expand its current distribution facilities. Management has projected the project will produce the following cash flows for the first two years (in millions).

Year	1	2
Revenues	1,100	1,425
Operating expense	425	550
Depreciation	230	270
Increase in working capital	60	70
Capital expenditures	270	320
Corporate tax-rate	20%	20%

The depreciation tax shield for Shepard Industries project in year 1 is closest to:

A. $69

B. $46

C. $55

D. $54

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