1. How does the allowable capital recovery period affect the potential return on the investment in an asset?

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  1. How does the allowable capital recovery period affect the potential return on the investment in an asset?
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The period in which capital can be recovered affects the return on an investment in an asset through the tax savings the deduction provides.  The time value of money factor makes earlier capital recovery (i.e., earlier tax savings) more valuable.  Therefore, the more rapid an asset’s cost can be written off, the greater the return on that asset from the tax savings generated by the deduction.

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