Depreciation allowance ________the taxes a firm must pay and ________ the net present value of an investment.
A)increases; decreases
B)decreases; increases
C)increases; increases
D)decreases; decreases

Question

Quizplus · Accepted Answer

Depreciation allowance decreases the taxes a firm must pay as it is considered as a cost for tax purposes. However, it increases the net present value of an investment as it reduces the taxable income which results in a lower tax liability.

Depreciation Allowance ________The Taxes a Firm Must Pay and ________

Depreciation Allowance The Taxes a Firm Must Pay and