Suppose a Corporation Purchases an Asset for $100,000

question 44

Multiple Choice

Suppose a corporation purchases an asset for $100,000.Under straight-line depreciation,the corporation would be allowed to depreciate the asset over 5 years.Under accelerated straight-line depreciation,it would be allowed to depreciate the asset over 2 years.Now assume that the discount rate is 10%.What would the present discounted value of the tax deduction be under straight-line depreciation?

• A) $83,397.31
• B) $90,909.09
• C) $93,354.55
• D) $100,000

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Definitions:

Flashbulb Memory

A highly detailed, exceptionally vivid 'snapshot' of the moment and circumstances in which a piece of surprising and consequential (or emotionally arousing) news was heard.

Retention Cue

A retention cue is a stimulus or reminder that aids in the recall of information from memory.

Vivid Memory

A particularly clear and detailed memory of an event or moment, often with emotional significance, that remains strong over time.

Ignoring Base Rates

Involves disregarding statistical information in favor of anecdotal evidence when making judgments.