What is the effect of using MACRS rather than straight-line depreciation?
A) It increases the NPV.
B) The total amount of depreciation is increased.
C) It allows asset book values to increase with market values.
D) It increases gross fixed assets.

Question

Quizplus · Accepted Answer

MACRS accelerates depreciation, leading to higher depreciation expenses in the early years, which reduces taxable income and increases cash flow, thereby increasing the NPV.

What Is the Effect of Using MACRS Rather Than Straight-Line