Which of the Following Best Explains Why Is It Sensible

question 36

Multiple Choice

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

• A) The firm will substantially decrease its depreciation tax shield across all of 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 have substantially fewer depreciation expenses later in 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:

Molecular Shape

The three-dimensional arrangement of atoms within a molecule, determining its reactivity, polarity, and physical properties.

Linear

Describes a structure, process, or mathematical function that proceeds or is arranged in a straight line or sequence.

Phosphine

A toxic, colorless, flammable gas with the chemical formula PH3, used in the semiconductor industry and as a pesticide.

Triangular Pyramid

A geometric solid with a triangular base and three faces that are also triangles, meeting at a single point called the apex.