The After-Tax Cost of an Asset Increases If

question 39

Multiple Choice

The after-tax cost of an asset increases if

• A)The cost recovery period is increased
• B)The marginal tax rate increases
• C)The discount percentage decreases
• D)The asset's salvage value increases

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Definitions:

Opportunity Cost

The loss of potential gain from other alternatives when one particular alternative is chosen.

Savings Account

A deposit account held at a bank or other financial institution that provides principal security and a modest interest rate.

Economic Profit

The difference between total revenue and total costs, including both explicit and implicit costs, indicating the efficiency with which a company utilizes its resources.

Explicit Costs

are direct, out-of-pocket payments for expenses incurred by a business or individual.