标题: NPV and depreciation method [打印本页] 作者: ruchita 时间: 2011-7-13 15:22 标题: NPV and depreciation method
Is it true that: NPV under straight line depreciation method is lower than MACR depreciation method?
My approach: depreciation under straight line is even through years. Though, depreciation under MACR is higher beginning years, lower later years, which implies lower NI beginning years and higher later years. These NIs got discounted at lower rates begin years and higher rates later years, which might results in lower NPV relatively to NPV under straight line.作者: zephyranalyst 时间: 2011-7-13 15:22
Even though your NI is lower, your operating cash flow is higher during the first few years and lower later on (and that is what we are measuring).
And it is a fact, that we appreciate cash coming faster to us so that we can use it for other good investment purposes.
