Charlene is evaluating a capital budgeting project that should last for $4$ years. The project requires $$625,000$ of equipment and is eligible 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 the equipment would be depreciated evenly over its $4-$year life $($ignore the half$-$year convention for the straight$-$line method$).$ The company's WACC is $9\%,$ and its tax rate is $25\%.$

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

Year Scenario $1$

$($Straight$-$Line$)$ Scenario $2$

$($Bonus Depreciation$)$

$0$ $

$

$1$ $

$

$2$ $

$

$3$ $

$

$4$ $

$

Which depreciation method would produce the higher NPV$?$

$-$Select$-$

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

$Charlene is evaluating a capital budgeting project that should last for $4$ years. The project requires $$625,000$ of equipment and is eligible 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 the equipment would be depreciated evenly over its $4-$year life $($ignore the half$-$year convention for the straight$-$line method$).$ The

company's WACC is $9\%,$ and its tax rate is $25\%.$

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

b$.$ Which depreciation method would produce the higher NPV$?$

Straight$-$Line

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

$