During the maturity stage, capital investments are offset by:

• A. Inflation
• B. Tax credits
• C. Depreciation
• D. Revenue growth

Answer: (C)

Depreciation provides a tax shield that reduces taxable income, which helps offset the cost of capital investments during the maturity stage. As assets age, reinvestment may be needed to maintain performance, and the depreciation expense lowers the taxes owed, improving cash flow and making it easier to fund those investments. Inflation would raise costs, tax credits are separate incentives, and revenue growth isn’t the automatic accounting offset for capital reinvestment. So depreciation is the mechanism that most directly offsets capital investments in this period.