The Straight Line and the Modified Accelerated Cost Recovery System

question 17

Multiple Choice

The Straight Line and the Modified Accelerated Cost Recovery System (MACRS) are examples of

• A) accounting schemes.
• B) depreciation methods.
• C) investment strategies.
• D) dance steps.

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Definitions:

Nominal Rate

The interest rate set by the lending institution, not adjusted for inflation, representing the actual yearly cost of funds over the term of a loan.

Compounding Period

The period of time after which interest is credited to the depositor’s account for purposes of computing subsequent interest.

Interest Rate

The percentage charged on a loan or paid on savings over a specific period, usually expressed as an annual percentage of the principal.

Invested Today

The action of allocating resources, usually money, in the present with the expectation of receiving a future return.