The after-tax cost of a depreciable asset is dependent on the purchaser's marginal tax rate.

Question

Quizplus · Accepted Answer

The after-tax cost of a depreciable asset is indeed dependent on the purchaser's marginal tax rate because depreciation deductions reduce taxable income, and the value of these deductions is influenced by the tax rate. Higher marginal tax rates increase the value of the depreciation deductions, thereby reducing the after-tax cost of the asset.

The After-Tax Cost of a Depreciable Asset Is Dependent on the Purchaser's