The annual tax depreciation expense on an asset reduces income taxes by an amount equal to:
A. The firm\\’s average tax rate times the depreciation amount.
B. One minus the firm\\’s average tax rate times the depreciation amount.
C. The firm\\’s marginal tax rate times the depreciation amount.
D. One minus the firm\\’s marginal tax rate times the depreciation amount.
Answer:C
The annual tax depreciation expense on an asset reduces income taxes by an amount equal to:
A. The firm\\’s average tax rate times the depreciation amount. B. One minus the firm\\’s average tax rate times the depreciation amount. C. The firm\\’s marginal tax rate times the depreciation amount. D. One minus the firm\\’s marginal tax rate times the depreciation amount.