Assume that at the beginning of 206, Northeast USA, a regional airline operating predominantly in Southeast Asia, purchased a used Boeing 737 aircraft at a cost of $53,400,000. Northeast USA expects the plane to remain useful for five years (6 million miles) and to have a residual value of $5,400,000. Northeast USA expects to fly the plane 725,000 miles the first year; 1,375,000 miles each year during the second, third, and fourth years; and 1,150,000 miles the last year. Assume Northeast USA is trying to decide which depreciation method to use for income tax purposes. The company can choose from among the following methods: (a) straight-line, (b) units of production, or (c) double-declining-balance. 1. Which depreciation method offers the tax advantage for the first year? Describe the nature of the tax advantage. 2. How much income tax will Northeast USA save for the first year of the airplane's use under the method you selected above as compared with using the straight-line depreciation method? Assume the tax rate is 34%. Ignore any earnings from investing the extra cash. 1. Which depreciation method offers the tax advantage for the first year? Describe the nature of the tax advantage. The method offers the tax advantage for the first year of the asset's use. The advantage results from the amount of depreciation (versus the other methods) in the first year. This method also produces the cash that the taxpayer can invest to earn more income. 2. How much income tax will Northeast USA save for the first year of the airplane's use under the method you selected above as compared with using the straight-line depreciation method? Assume the tax rate is 34%. Ignore any earnings from investing the extra cash. Calculate how much income tax will be saved between the method that offers the tax advantage and the straight-line depreciation method