When using MACRS depreciation, after-tax cash flows will generally be higher in the early years and lower in the later years than if straight-line depreciation had been used.

Question

Quizplus · Accepted Answer

MACRS depreciation allows for more rapid depreciation in the early years of an asset's life, resulting in higher depreciation deductions and lower taxable income. This leads to higher after-tax cash flows in the early years. However, in the later years, the depreciation deductions are lower, resulting in higher taxable income and lower after-tax cash flows.

When Using MACRS Depreciation, After-Tax Cash Flows Will Generally Be