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1 2 - 6 DEPRECIATION METHODS Charlene is evaluating a capital budgeting project that should last for 4 years. The project requires $ 8 0
DEPRECIATION METHODS Charlene is evaluating a capital budgeting project that should last for years. The project requires $ of equipment and is eligible for bonus depreciation. She is unsure whether immediately expensing the equipment or using straightline depreciation is better for the analysis. Under straightline depreciation, the cost of the equipment would be depreciated evenly over its year life. The company's WACC is and its tax rate is a What would the depreciation expense be each year under each method? b Which depreciation method would produce the higher NPV and how much higher would it be
DEPRECIATION METHODS Charlene is evaluating a capital budgeting project
that should last for years. The project requires $ of equipment and is
eligible for bonus depreciation. She is unsure whether immediately expensing
the equipment or using straightline depreciation is better for the analysis. Under
straightline depreciation, the cost of the equipment would be depreciated evenly
over its year life. The company's WACC is and its tax rate is
a What would the depreciation expense be each year under each method?
b Which depreciation method would produce the higher NPV and how much
higher would it be
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