The Accelerated Write-Off of Capital Costs in MACRS Depreciation Provides

question 11

Multiple Choice

The accelerated write-off of capital costs in MACRS depreciation provides a taxable expense that reduces taxes at a faster rate than with straight-line depreciation.Therefore,according to ________ concepts,we can surmise that bigger tax cuts in the earlier years and lower tax cuts in the later years are better than a steady tax cut each year.

• A)time-value of money
• B)depreciation and sunk costs
• C)depreciation and opportunity costs
• D)interest rate

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Definitions:

Par Value

A nominal or face value assigned to a share of stock in the company's charter, representing the minimum amount the stock can be sold for.

Stockholders' Equity

The residual interest in the assets of a corporation that remains after deducting its liabilities, representing the ownership interest of shareholders.

Debt Refunding

The process of replacing an existing debt obligation with a new one, often with more favorable terms.

Ordinary Income

Earnings derived from standard business operations and not classified as capital gains or dividend income.