Charlene is evaluating a capital budgeting project that should last 4 years. The project requires $550,000 of equipment and is elgible for 100% bonus depreciation. She is unsure whether immediately expensing the equipment or using straight line depreciation is better for the analysis. Under straight line depreciation, the cost of equipment would be depreciated evenly over its 4 year life (ignore the half year convention for straight line method) The compays WACC is 11% and its tax rate is 30%.

a. What would be the depreciation expense be each year under each method? Enter answers as positive values. Round your answer to the nearest dollar.

0. straight line. bonus depreciation

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b. Which depreciation method would produce the higher NPV?

How much higher would the NPV be under the preffered method? Do not round intermediate calculations. Round your answer to the nearest dollar.