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Depreciation Methods Wendy's boss wants to use straight - line depreciation for the new expansion project because he said it will give higher net income
Depreciation Methods
Wendy's boss wants to use straightline depreciation for the new expansion project because he said it will give higher net income in earlier years and give him a larger bonus. The project will last years and requires $ of equipment. The company could use either straightline or the year MACRS accelerated method. Under straightline depreciation, the cost of the equipment would be depreciated evenly over its year life. Ignore the halfyear convention for the straightline method. The applicable MACRS depreciation rates are and The project cost of capital is and its tax rate is
What would the depreciation expense be each year under each method? Enter your answers as positive values. Do not round intermediate calculations. Round your answers to the nearest dollar.
Year Scenario Straight Line Scenario MACRS
$CORRECT $CORRECT
$CORRECT $CORRECT
$CORRECT $CORRECT
$CORRECT $CORRECT
Which depreciation method would produce the higher NPV and how much higher would it be Do not round intermediate calculations. Round your answer to the nearest cent.
The NPV under
Scenario CORRECT
will be higher by $ INCORRECT
I keep getting the incorrect number. Could I see an Excel sheet?
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