Question 18

Suppose Bad Boyz prefers to use the MACRS approach to depreciation and Good Girlz prefers to use the Straight-Line approach to depreciation. From a Time Value of Money standpoint, is Bad Boyz or Good Girlz taking the smarter approach? Why?

Group of answer choices

Bad Boyz; A MACRS approach provides a larger tax-break at the end of the project.

Good Girlz; A Straight-Line approach provides a larger tax-break at the end of the project

Bad Boyz; A MACRS approach provides a larger tax-break at the beginning of the project.

Good Girlz; A Straight-Line approach provides a larger tax-break at the beginning of the project.

From a Time Value of Money standpoint, there is no difference in the two approaches.

Question 19

You are considering the following two mutually exclusive projects. Which project should be accepted if the discount rate is 12%?

Year	Project A	Project B
0	-$42,000	-$42,000
1	14,000	30,000
2	14,000	10,000
3	30,000	14,000

Group of answer choices

Project A because the crossover point is higher than the discount rate

Project A because the crossover point is lower than the discount rate

Project B because the crossover point is higher than the discount rate

Project B because the crossover point is lower than the discount rate

Either project A or B because you are indifferent.