1. Firms want to use MARCS to depreciate their assets because:

a) they want to show higher profits for the first few years of a project.

b) they want to have higher cash flows at the end of the project.

c) they want to have lower operating cash flows at the beginning.

2. If a company sells an asset below book value, it will:

a) increase free cash flow.

b) have not get additional tax benefit or liability.

c) pay taxes on the value of the asset sold.

d) get additional tax benefits.

d) they want to has less salvage value for the machine used for projects.

e) they want to capture more tax shield benefits early in the project.