found that depreciation increases the cost of capital before and after tax. Most of their assumptions are maintained …. However, commitment to perpetual reinvestment is in most cases not a reasonable assumption. Without it, depreciation decreases … the cost of capital before and after tax. The effect of depreciation is less in absolute value than in Levy and Arditti …

and tax-permitted depreciation, is considered. Both convex and concave survival functions can be accommodated. Three …-relevant accounting capital and true depreciation, (ii) mis-indexation of depreciation allowances, (iii) incomplete deductibility of …-exponential depreciation schedules are forced, by `approximation devices', to fit into the exponential decay schedule. -- Capital taxation …