Accelerated depreciation schedule possible for tax purposes

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1. Why do we choose NPV criterion when there exists conflict ranking between NPV and IRR?

2. Financial costs of an investment project include the interest expenses paid to creditors for providing debt capital and dividends paid to shareholders for providing equity capital. When we prepare annual cash flows for an investment, financial costs of an investment project do not show up in the computation of annual cash flows. For example, the Solution for Investment Decision in lecture slide T10.13 does not include any financial costs. Why?

3. Explain why it is advantageous for a firm to use the most accelerated depreciation schedule possible for tax purposes.

Reference no: EM131854183

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