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

question 6

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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