QUESTION $35$

One of the less flattering interpretations of the MIRR is "meaningless internal rate of return." Why do you think this term applied to MIRR?

determine the IRR of the project. The result is MIRR is the true interest rate compounded by the required return.

QUESTION $36$

In the context of capital budgeting, what is opportunity cost?

cost to acquire it$.$

what it cost to acquire it$.$

QUESTION $37$

Given the choice, would a firm prefer to use MACRS depreciation or straight$-$line depreciation? Why?

the choice between MACRS and straight$-$line is purely a time value issue; the total depreciation is the same; only the timing differs.

line depreciation due to the time value of the practice However, the total depreciation with both methods is the same.

For tax purposes, a firm would choose MACRS because it provides for small depreciation deductions later in the schedule. These larger deductions reduce taxes but have no other cash

consequences. Notice that the choice between MACRS and straight$-$line is purely a time value issue; the total depreciation is the same; only the timing differs.