The Present Value at Any Given Discount Rate of the Depreciation

question 98

Multiple Choice

The present value at any given discount rate of the depreciation tax shield is:

• A)equal for all depreciation methods.
• B)higher with MACRS than straight-line depreciation.
• C)higher for the tenth year than the seven-year recovery period class.
• D)likely to increase annually due to inflation.

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Definitions:

Straight-Line Method

A depreciation technique where an equal amount of depreciation expense is allocated for each year of the asset's useful life.