Given the financial manager's preference for faster receipt of cash flows,
A) a longer depreciable life is preferred to a shorter one.
B) a shorter depreciable life is preferred to a longer one.
C) the manager is not concerned with depreciable lives, because depreciation is a non-cash expense.
D) the manager is not concerned with depreciable lives, because once purchased, depreciation is considered a sunk cost.

Question

Quizplus · Accepted Answer

A shorter depreciable life means that the cost and associated tax benefits of the asset will be realized sooner, resulting in a faster receipt of cash flows. This aligns with the financial manager's preference for faster receipt of cash flows.

Given the Financial Manager's Preference for Faster Receipt of Cash