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 1,050 1,350 Operating expense 450 500 Depreciation 220 260 Increase in working capital 40 70 Capital expenditures 270 320 Marginal corporate tax rate 20 20 The depreciation tax shield for Shepard Industries project in year 2 is closest to A $52 B $ 44 C $ 62 D $ 78

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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	1,050	1,350
Operating expense	450	500
Depreciation	220	260
Increase in working capital	40	70
Capital expenditures	270	320
Marginal corporate tax rate	20%	20%

The depreciation tax shield for Shepard Industries project in year 2 is closest to:

A. $52

B.$ 44

C.$ 62

D.$ 78

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