Longer Class Lives for Depreciable Property and the Required Use

question 61

True/False

Longer class lives for depreciable property and the required use of straight-line method of depreciation should dampen the tax incentive for purchasing capital assets.

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Definitions:

Economic Expansion

A phase of the business cycle where the economy grows and increases in activity, marked by rising GDP, employment, and income.

EBIT

Earnings Before Interest and Taxes; a measure of a firm's profitability that includes all expenses except interest and income tax expenses.

Unlevered Firm

A company that operates without any debt financing, relying solely on equity for its financing needs.

Levered

Pertaining to the use of borrowed capital or debt to increase the potential return of an investment.