(a) Both depreciation and interest on borrowed money are by default in then-current form and thus, one needs to convert them to constant dollars form if the inflation effect is not considered in the after-tax analysis. (b) The book value at the end of the cost recovery period in the declining balance method is equal to the salvage value (c) In the insider's viewpoint approach, we consider market value of the current asset as its investment cost if it is retained (d) Corporates are allowed to take both a Section 179 expense deduction and bonus depreciation, simultaneously. (e) There exists exactly one real positive-valued internal rate of return for the following cash flow. EOY 1 23 3 Cash flow (S) -30,000 35,000 -6,000 10,000
(a) Both depreciation and interest on borrowed money are by default in then-current form and thus, one needs to convert them to constant dollars form if the inflation effect is not considered in the after-tax analysis. (b) The book value at the end of the cost recovery period in the declining balance method is equal to the salvage value (c) In the insider's viewpoint approach, we consider market value of the current asset as its investment cost if it is retained (d) Corporates are allowed to take both a Section 179 expense deduction and bonus depreciation, simultaneously. (e) There exists exactly one real positive-valued internal rate of return for the following cash flow. EOY 1 23 3 Cash flow (S) -30,000 35,000 -6,000 10,000
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
answer true or false for the fol
Transcribed Image Text:(a) Both depreciation and interest on borrowed money are by default in then-current form and thus,
one needs to convert them to constant dollars form if the inflation effect is not considered in the
after-tax analysis.
(b) The book value at the end of the cost recovery period in the declining balance method is equal
to the salvage value
(c) In the insider's viewpoint approach, we consider market value of the current asset as its
investment cost if it is retained
(d) Corporates are allowed to take both a Section 179 expense deduction and bonus depreciation,
simultaneously.
(e) There exists exactly one real positive-valued internal rate of
return for the following cash flow.
EOY
1
23
3
Cash flow
(S)
-30,000
35,000
-6,000
10,000
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