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A manager can choose between the following depreciation schedules for a project that has $1 million initial investment, and project life of ten years: Year
A manager can choose between the following depreciation schedules for a project that has $1 million initial investment, and project life of ten years: Year Schedule A Schedule B Schedule C Schedule D 1 33.33% 20.00% 14.29% 25.00% 2 44.45% 32.00% 24.49% 25.00% 3 14.81% 19.20% 17.49% 25.00% 4 7.41% 11.52% 12.49% 25.00% 5 11.52% 8.93% 6 5.76% 8.92% 7 8.93% 8 4.46% To maximize the project NPV he should choose: O Schedule A O To not apply depreciation and use the whole value of the initial investment as a tax cost at the end of the project when they sell the used equipment. Schedule C O Schedule D O Schedule B
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