All of the following would be a result of changing to the MACRS method of deprec
ID: 2681802 • Letter: A
Question
All of the following would be a result of changing to the MACRS method of depreciation except:a. Higher depreciation expense.
b. Lower taxes in the early years of a projects life
c. Lower taxable income in the early years of a projects life.
d. All of the above.
A firm currently uses straight line depreciation but is considering changing to MACRS. If the firm implements the change, which of the following will occur as a result of this change?
a. The firms taxable income will increase.
b. The firm will pay more in taxes.
c. The firms EBIT will increase.
d. None of the above.
A firm may not want to strive to match industry average ratios when:
a. The are a leader in the industry.
b. Firms in the industry are shifting into different directions.
c. Many of the competitor firms are foreign.
d. All of the above
Which of the following statements if correct?
a. if a firm has a very high fixed asset turnover, it means that the firm may be nearing its maximum production capacity.
b. An extremely low average collection period will maximize net income.
c. In general, a firm should strive for a high average payment period because it wants to pay for its purchases as quickly as possible.
d. All of the above.
Which of the following bonds will have the largest percentage increase in value if interest rates decrease by 1%
a. 2 year, 5% coupon bond
b. 30 year, 10% coupon bond
c. 10 year, zero coupon
d. 30 year, zero coupon
Explanation / Answer
c. Lower taxable income in the early years of a projects life.