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DEPRECIATION METHODS Charlene is evaluating a capital budgeting project that should last for 4 years. The project requires $100.000 of equipment. She is unsure what
DEPRECIATION METHODS Charlene is evaluating a capital budgeting project that should last for 4 years. The project requires $100.000 of equipment. She is unsure what depreciation method to use in her analysis, straight-line or the 3-year MACRS accelerated method. Under straight- lina apreciation, the cost of the equipment would ba dap ciated evenly over its 4-year life ignore the half-year con antion for the straight-ina m at d The applicable MACRS de rec ation rates are 33% 45% 15% and 7 The companys wg C is 10% and its tax rate is 35%. a. What would the depreciation expense be each year under each method? Round your answers to the nearest cent. Scenario 1 Scenario2 (MACRS) How much higher would the NPV be under the preferred method? Round your answer to two decimal places. Do not round your intermediste calculations
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