Financial Decisions, Winter 2011, Article 2
The Impact of Bonus Depreciation on Project Decision
Gregory A. Kuhlemeyer* and John M. Wachowicz, Jr.**
*Carroll University **The University of Tennessee
This paper develops an Excel model useful to students, academics,
and business professionals that values the impact of government driven
increases in temporary
allowances, known as "bonus depreciation." Bonus depreciation is a
temporary measure that
has been used as a tool to stimulate economic activity by directly
affecting the profitability and
payback of a project and thereby impacting the investment decision of
managers. We develop an
evaluation technique, using net present value (NPV), that integrates
the effects of bonus
depreciation in a flexible model that can be used to determine the
ultimate change on a project's
JEL codes: A22, A23, G30, G31
Keywords: bonus depreciation, simulation, Excel
The article is
available online at: http://www.financialdecisionsonline.org/current/KuhlemeyerWachowiczWinter2011.pdf
The Excel spreadsheet
appearing in the article is available online
Other Useful Bonus Depreciation Links
Section 179 and Bonus Depreciation Expensing Allowances. Congressional Reasearch Service
(CRS) Report for Congress prepared by Gary Guenther, Analyst in Public Finance,
July 15, 2013.
Economic Stimulus Act (ESA) of 2008
-- Plus Numerous Extensions/Expansions through the PATH Act of 2015. May
affect business tax payments, capital
budgeting decisions, and/or borrow-to-buy vs. leasing decisions.
One-stop web clearinghouse for information about capital
incentives involving "bonus depreciation" programs.
CCH Tax Briefing: Protecting Americans from Tax Hikes Act of 2015
CCH Tax Briefing: American Taxpayer Relief Act of 2012.
CCH Tax Briefing: 2010 Tax Relief/Job Creation Act.
CCH Tax Briefing: 2008 Economic Stimulus Package.