Southport Company is considering the purchase of a piece of equipment that costs $113,400. The equipment would be depreciated on a straight-line basis to its expected salvage value of $6400 over its 10 years useful life. Assuming a tax rate of 40%, what is the annual amount of the depreciation tax shield provided by this investment?
A. $6420
B. $10,700
C. $4280
D. None of these answers is correct.
Answer: C
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