Financial Decisions, Winter 2011, Article 2
The Impact of Bonus Depreciation on Project Decision Making

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 first-year depreciation 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 base NPV.

JEL codes: A22, A23, G30, G31
Keywords: bonus depreciation, simulation, Excel

  •   The article is available online at:

  •  The Excel spreadsheet appearing in the article is available online at: Excel Spreadsheet.

    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.

  • DepreciationBonus.Org. One-stop web clearinghouse for information about capital investment 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.

    E-mail Comments to John Wachowicz    Wachowicz's Web World Button

        Revised 11/15/17