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Suppose a Corporation Purchases an Asset for $100,000

Question 10

Multiple Choice

Suppose a corporation purchases an asset for $100,000.Under straight-line depreciation,the corporation would be allowed to depreciate the asset over 5 years.Under accelerated straight-line depreciation,it would be allowed to depreciate the asset over 2 years.What must the discount rate be such that the corporation is indifferent between straight-line depreciation and accelerated straight-line depreciation?


A) -10%
B) 0%
C) 5%
D) 10%

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