When Employing the MACRS (Modified Accelerated Cost Recovery System) Method

question 30

Multiple Choice

When employing the MACRS (modified accelerated cost recovery system) method of depreciation in a capital budgeting decision, the use of MACRS as compared to the straight-line method of depreciation will, for an asset with zero estimated salvage value at the end of its useful life, result in

• A) Equal total depreciation deductions over the life of the asset.
• B) MACRS producing less total depreciation than the amount determined under the straight-line method.
• C) Equal total tax payments, after discounting for the time value of money.
• D) MACRS producing more total depreciation than deductions based on the straight-line method.
• E) MACRS producing lower annual depreciation deductions in the early years of the asset's life.