Value of the deprecation tax shield


True of False with proper reason.

1) Capitol Cost Allowance and a Terminal loss result in tax savings if a firm has positive taxable income, however, a Recapture of Income and Capital Gains increases taxes payable.

2) All else equal, a decrease in the corporate tax rate decreases the value of the deprecation tax shield.

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Accounting Basics: Value of the deprecation tax shield
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