FIN 571 TUTOR Motivated Minds/fin571tutor.com FIN 571 TUTOR Motivated Minds/fin571tutor.com | Page 64

Briefly explain why such a firm would tend to become riskier
over time.
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FIN 571 Week 4 DQ 2
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Phyllis believes that the firm should use straight-line
depreciation for a capital project because it results in higher net
income during the early years of the project’s life. Joanna
believes that the firm should use the modified accelerated cost
recovery system depreciation because it reduces the tax liability
during the early years of the project’s life. Assuming you have a
choice between depreciation methods, whose advice should you
follow? Why?
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FIN 571 Week 4 Individual Assignment Analyzing Pro
Forma Statements
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