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Which of the following best explains why is it sensible for a firm to use an accelerated depreciation schedule such as MACRS rather than straight-line depreciation?

▸ The firm can decide over how many years an item may be depreciated, thus allowing it full control of its depreciation expenses.

▸ The firm will have substantially fewer depreciation expenses later in the depreciation timeline.

▸ The firm will receive greater benefits to its cash flow earlier in the depreciation timeline and thus increase net present value (NPV).

▸ The firm will substantially decrease its depreciation tax shield across all of the depreciation timeline.
Textbook 
Fundamentals of Corporate Finance
Edition: 2nd
Authors:
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2 weeks ago
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The firm will receive greater benefits to its cash flow earlier in the depreciation timeline and thus increase net present value (NPV).
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2 weeks ago
Brilliant
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