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:

Associative Learning

A learning process by which a connection or association is made between two stimuli or between a behavior and a stimulus.

Psychologist

A professional specializing in the study of the mind and behavior, often providing therapy and counseling services.

Classical Conditioning

A learning process that occurs when two stimuli are repeatedly paired: a response which is at first elicited by the second stimulus is eventually elicited by the first stimulus alone.

UCS

An acronym standing for Unconditioned Stimulus, a stimulus that naturally and automatically triggers a response without needing to be learned.