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Answer (C) is correct . Accelerated depreciation results in greater depreciation in the early years of an asset’s life compared with the straight-line method. Thus, accelerated depreciation results in lower income tax expense in the early years of a project and higher income tax expense in the later years. By effectively deferring taxes, the accelerated method increases the present value of the depreciation tax shield.

Answer (A) is incorrect because The hurdle rate can be reached more easily as a result of the increased present value of the depreciation tax shield.
Answer (B) is incorrect because The greater depreciation tax shield increases the NPV.
Answer (D) is incorrect because Greater initial depreciation reduces the cash outflows for the taxes, but has no effect on the initial cash outflows.