A Firm Invests in a 7-Year Project That Requires the Purchase

Multiple Choice

A firm invests in a 7-year project that requires the purchase of a $135,000 machine tool.This will be depreciated using 5-year MACRS and will have no salvage value.When will this equipment affect the project's tax payments?

A) Every year for 5 years
B) At the time of purchase only
C) Every year for 6 years
D) Every year for 7 years