Business, 24.05.2021 20:30 Rainbowface33

Firm A uses straight-line depreciation. Firm B uses MACRS depreciation. Both firms bought $75,000 worth of equipment last year that has a tax life of 5 years. The 5-year MACRS percentage rates, starting with Year 1, are: 20, 32, 19.2, 11.52, 11.52, and 5.76. Both firms have a marginal tax rate of 34 percent and identical operating cash flows except for the depreciation effects. Given this, you know the:___. A) operating cash flow of Firm A is greater than that of Firm B for Year 3.
B) depreciation expense for Firm A will be greater than Firm B's expense every year.
C) market value of Firm B's equipment is greater than the market value of Firm A's equipment at the end of Year 2.
D) equipment has a higher value on Firm B's books than on Firm A's at the end of Year 2.
E) market value of Firm A's equipment is greater than the market value of Firm B's at end the first year.

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Firm A uses straight-line depreciation. Firm B uses MACRS depreciation. Both firms bought $75,000 wo...

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