Answer:
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
