Depreciation Given the choice, would a firm prefer to use MACRS depreciation or straight-line depreciation? Why?
Question:
Depreciation Given the choice, would a firm prefer to use MACRS depreciation or straight-line depreciation? Why?
Step by Step Answer:
For tax purposes a firm would choose MACRS because it provides f...View the full answer
Fundamentals of Corporate Finance
ISBN: 978-0077861629
8th Edition
Authors: Stephen A. Ross, Randolph W. Westerfield, Bradford D.Jordan
Related Video
In accounting terms, depreciation is defined as the reduction of the recorded cost of a fixed asset in a systematic manner until the value of the asset becomes zero or negligible. An example of fixed assets are buildings, furniture, office equipment, machinery, etc. The land is the only exception that cannot be depreciated as the value of land appreciates with time. Depreciation allows a portion of the cost of a fixed asset to be the revenue generated by the fixed asset. This is mandatory under the matching principle as revenues are recorded with their associated expenses in the accounting period when the asset is in use. This helps in getting a complete picture of the revenue
Students also viewed these Corporate Finance questions
-
Collection and disbursement floats which would a firm prefer: a net collection float or a net disbursement float? Why?
-
Under what conditions would a firm prefer the following? a. A fixed-rate term loan from a bank b. A floating-rate term loan, with the rate tied to the banks prime rate
-
Why would some prefer to use normal activity rather than expected actual activity to compute a predetermined overhead rate?
-
Assume a portfolio of two assets, with $10m invested in asset 1 and $5m invested in asset 2. The per pound covariance matrix of the two assets is: Asset 1 Asset 2 The best hedge of asset 2 is: Asset...
-
A baseball bat balances when placed on a fulcrum in the position shown in FIGURE 9-30. Is the mass of the bat to the left of the fulcrum greater than, less than, or equal to the mass of the bat to...
-
If project A has an expected value of net present value of $200 and a standard deviation of $400, is it more risky than project B, whose expected value is $140 and standard deviation is $300? Explain.
-
Because the feed underflow in Example 14-1 was not the same as in the other stages, we had to do the feed stage calculation separately, but connected to, the calculation for the remainder of the...
-
(a) Use six rectangles to find estimates of each type for the area under the given graph of f from x = 0 to x = 12. (i) L6 (sample points are left endpoints) (ii) R6 (sample points are right...
-
A stock price is currently ksh40. Over each of the next two 3 months period it is expected to go up by 10% or down by10%.the risk free rate is 12% per annum with continuous compounding.suppose the...
-
Consider the evaporator and control system in Figure 13.6. (a) Should each control valve be air-to-open (AO) or air-to-close (AC)? (b) Should each PI controller be direct-acting or reverse-acting?...
-
Opportunity Cost In the context of capital budgeting, what is an opportunity cost?
-
Net Working Capital In our capital budgeting examples we assumed that a firm would recover all of the working capital it invested in a project. Is this a reasonable assumption? When might it not be...
-
A wooden block with mass 1.50 kg is placed against a compressed spring at the bottom of an incline of slope 30.00 (point A). When the spring is released, it projects the block up the incline. At...
-
5. A vertical cantilever is loaded by hydrostatic pressure. Assume the following stress state 0x Oy = Try qx y + 4c qx 2 3qx 8c3 1/3 (-27y + 5 2xy). cry), 4c3 +qx 3y (1-31). 4c - (c - y) - 803 (C -...
-
Prove that 7" -1 is a multiple of 6 for all n N. (Use Mathematical Induction!)
-
Pretend you are working for a Florida Supervisor of Elections office doing an internship and have been for 8 weeks. Can we draft a document of everything you make have handled and ran into while...
-
The linkage is braced by a spring of stiffness k in order to support the vertical force P. The system lies in the vertical plane, and the spring is unstretched when 8 = 45. Derive the equations of...
-
3x+7 The function f(x) = is one-to-one. 2x-3 (a) Find its inverse and check your answer. (b) Find the domain and the range of f and .
-
The 2-in.-diameter bar is fixed connected at its ends and supports the axial load P. If the material is elastic perfectly plastic as shown by the stressstrain diagram, determine the smallest load P...
-
A survey of 70 college freshmen asked whether students planned to take biology, chemistry, or physics during their first year. Use the diagram to answer each question. How many of the surveyed...
-
People experiencing a medical emergency experience better outcomes if someone near them has first aid training and can immediately begin providing assistance. As a result, first aid training and...
-
What are the three types of financial management decisions? For each type of decision, give an example of a business transaction that would be relevant.
-
What are the three types of financial management decisions? For each type of decision, give an example of a business transaction that would be relevant.
-
What are the three types of financial management decisions? For each type of decision, give an example of a business transaction that would be relevant.
-
13. A present investment of $50,000 is expected to yield $7,000 per year at the end of each year for 15 years. Determine the annual rate of return. 6500
-
5 20 points Suppose that you are a U.S.-based importer of goods from the United Kingdom. You expect the value of the pound to increase against the U.S. dollar over the next 30 days. You will be...
-
Problem 7-06 As an equity analyst, you have developed the following return forecasts and risk estimates for two different stock mutual funds (Fund T and Fund U): Forecasted Return Fund T Fund U 7.0%...
Study smarter with the SolutionInn App