LeBron's Lifejackets is considering adding a new product line that is expected to increase annual sales by $375,000 and cash expenses by $297,000. The initial investment will require $345,000 in fixed assets that will be depreciated using the straight-line method to a zero book value over the six-year life of the project. Ignore bonus depreciation. The company has a marginal tax rate of 21 percent. What is the annual value of the depreciation tax shield.

Multiple Choice

• $12,075

• $57,500

• $13,650

• $10,750