Silver Bricks Inc. bought a new £25,000 skid steer loader for its construction business on January 3, 2020. The loader has a 5-year economic life and recovery period. The cost of capital of the company is 12% and its tax rate is 40%. 

1. Suppose Silver Bricks uses straight-line depreciation for tax purposes. Compute the PV of the tax savings from depreciation. Assume that Silver Bricks takes a full year depreciation at the end of 2020. 

2. Suppose Silver Bricks uses MACRS depreciation for tax purposes. Compute the PV of the tax savings from depreciation. 

3. Suppose Silver Bricks was allowed to immediately deduct the entire cost of the loader for tax purposes. Compute the PV of the tax savings from depreciation. 

4. Which of the methods of deducting the cost of the loader would Silver Bricks prefer if all the three were allowable for tax purposes? Why?