What method of depreciation would you prefer, MACRS or straight-line,
QUESTION
What method of depreciation would you prefer, MACRS or straight-line, if your objective is to maximize the present value of your firms cash flows?
n equal amount of depreciation is charged in all the years during the life of the asset. Thus, when the amount of depreciation is added back to the profits after taxes the cash flows of the firm are higher in case of MACRS method of depreciation. The higher cash flows in the initial years result in higher present value.
ANSWER:
Expert paper writers are just a few clicks away
Place an order in 3 easy steps. Takes less than 5 mins.