Does depreciation affect cash flow in a positive or negative manner? From a net present value perspective, why is accelerated depreciation preferable? Is it acceptable to utilize one depreciation method for tax purposes and another for financial reporting purposes? Which method is relevant for determining project cash flows?
Answer to relevant QuestionsIn what sense does an increase in accounts payable represent a cash inflow? Why is it important to consider cannibalization in situations where a company is considering adding substitute products to its product line? The government is considering a proposal to allow even greater accelerated depreciation deductions than those specified by MACRS. a. For which type of company would this change be more valuable, a company facing a 10 % tax ...New York Pizza is considering replacing an existing oven with a new, more sophisticated oven. The old oven was purchased three years ago at a cost of $20,000, and this amount was being depreciated under MACRS using a 5-year ...Seattle Manufacturing is considering the purchase of one of three mutually exclusive projects for improving its assembly line. The firm plans to use a 14 % cost of capital to evaluate these equal-risk projects. The initial ...
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