Which of the Following Best Explains Why It Is Sensible

question 20

Multiple Choice

Which of the following best explains why it is sensible for a firm to use an accelerated depreciation schedule rather than straight-line depreciation?

• A)The firm will have substantially fewer depreciation expenses later in the depreciation timeline.
• B)The firm can decide over how many years an item may be depreciated, thus allowing it full control of its depreciation expenses.
• C)The firm will substantially decrease its depreciation tax shield across all of the depreciation timeline.
• D)The firm will receive greater benefits to its cash flow earlier in the depreciation timeline and thus increase net present value (NPV).

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Definitions:

Mental Flexibility

The ability to adapt one's thinking and behavior in response to changing circumstances or new information.

Creativity

The ability to produce original and valuable ideas or solutions by thinking outside the conventional boundaries.

Sigmund Freud

An Austrian neurologist and the founder of psychoanalysis, a clinical method for treating psychopathology through dialogue between a patient and a psychoanalyst.

Unconscious

A reservoir of feelings, thoughts, urges, and memories that are outside of our conscious awareness.