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7. Your company bought a new machine (that will last for 4 years) for $40,000 with a loan from the bank with a 4% interest

7. Your company bought a new machine (that will last for 4 years) for $40,000 with a loan from the bank with a 4% interest rate.

a. What is the present discounted value of the depreciation allowance if the company can depreciate the cost of the equipment by equal amounts each year for the expected life of the equipment?

b. What is the PDV of the depreciation allowance if you can depreciate the cost equally over 2 years?

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