The Lumber Yard Is Considering Adding a New Product Line

The Lumber Yard is considering adding a new product line that is expected to increase annual sales by $238,000 and cash expenses by $184,000.The initial investment will require $96,000 in fixed assets that will be depreciated using the straight-line method to a zero book value over the 6-year life of the project.The company has a marginal tax rate of 32 percent.What is the annual value of the depreciation tax shield?

A) $5,120
B) $13,160
C) $25,840
D) $32,560
E) $41,840