Redbird corporation provides the following data: cash inflows $50,000 cash outflows $43,000 net income $35,000 depreciation deduction $ 5,000 accumulated depreciation $10,000 tax rate 30% what is redbird's tax shield?

The correct answer to the following question is $1500.

Explanation:

Tax shield can be defined as the deductions which are allowed on the taxable income, which would ultimately lead to decrease in the taxes paid to the government.

Given information -

Cash inflow - $50,000

Cash outflow - $43,000

Net income - $35,000

Depreciation deduction - $5000

Accumulated depreciation - $10,000

tax rate - 30%

For taking out the tax shield - Sum of taxable deduction x Tax rate

Depreciation expense x tax rate

= $5000 x 30%

= $1500

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hope it ,

bioteacher101