Which of the following statements is CORRECT?

Question

Quizplus · Accepted Answer

Using accelerated depreciation methods such as MACRS can result in higher tax deductions and lower taxable income, which can lead to increased cash flows and a higher forecasted NPV for a project. Option A is incorrect because corporations may choose to use various depreciation methods in accordance with tax laws and regulations. Option B is incorrect because corporations may differ in their depreciation methods for stockholder reporting and tax purposes. Option D is incorrect because the choice of depreciation method can affect the timing and amount of cash flows, and thus the resulting NPV. Option E is incorrect because depreciation is a non-cash expense which reduces taxable income and can affect cash flows indirectly, but does not directly affect NPV.

Which of the Following Statements Is CORRECT