When Compared to the Straight-Line Depreciation Method, MACRS Has

question 35

Multiple Choice

When compared to the straight-line depreciation method, MACRS has

• A) a greater proportion of its depreciation early in the life of the asset.
• B) a lesser proportion of its depreciation early in the life of the asset.
• C) an equal proportion of its depreciation early in the life of the asset.
• D) none of the above.

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Definitions:

Credit Policy

A set of guidelines that a company follows to determine credit terms for customers, which influences decisions such as payment periods and credit limits.

Net Present Value

A method used in capital budgeting to evaluate the profitability of an investment or project, calculated as the difference between the present value of cash inflows and outflows over a period.

Monthly Interest Rate

The fraction of the annual interest rate divided by twelve, representing the interest for a single month.

Credit Policy

A credit policy is a set of guidelines that a company follows to determine the credit terms and conditions for its customers, including payment terms, credit limits, and how to manage delinquent accounts.