Using accelerated depreciation for tax reporting increases the net present value of an asset's cash flows because it produces larger net cash inflows in the early years of the asset's life.

Question

Quizplus · Accepted Answer

Accelerated depreciation allows for larger tax deductions in the early years of an asset's life, resulting in larger net cash inflows due to reduced tax payments. This increases the net present value of the asset's cash flows.

Using Accelerated Depreciation for Tax Reporting Increases the Net Present