Why Is It Likely That Firms Would Use Straight-Line Depreciation

question 32

Multiple Choice

Why is it likely that firms would use straight-line depreciation methods for depicting project analysis to shareholders or lenders, if such choice were possible?

• A)it increases the NPV of the project.
• B)it decreases the tax liability of the project.
• C)it mirrors the market value of the assets.
• D)it allows asset balances to decline more slowly.

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Definitions:

Authorized

Having official permission or power to do something or for something to take place.

Accepted Draft

An agreement or negotiable instrument that has been formally acknowledged by the addressee, promising to pay the specified amount by a certain date.

Obligated

Being legally or morally required to do something based on laws, regulations, agreements, or ethical principles.

Alteration Defense

A legal argument used when a document has been changed or modified, affecting the obligations or rights under that document.