Depreciation Tax Shields Lincoln Company has purchased equipment for $500,000. After it is fully depreciated, the equipment will have no salvage value. Lincoln may select either of the following depreciation schedules for tax purposes Option 1 Option 2 Year Depreciation Depreciation $100,000 550.000 2 160.000 100.000 3 96.000 100,000 57.600 100,000 5 57,600 100,000 28,800 50.000 6 1 Assuming a 40% tax rate and a 12% desired annual return, compute the total present value of the tax savings provided by these alternative depreciation tax shields. Round answers to the nearest whole number. Use rounded answers to calculate total. Option 1 depreciation Year (N) Tax Savings (FV) Present Value $ 40,000 $ 35.714 2 64.000 51,020 3 38.400 27.333 X 23,000 23,040 11.520 $ OX 4 OX 5 0 6 OX Option 2 depreciation: Year (N) Tax Savings (FV) Present Value 1 $ 20,000 $ 17,858 X 2 40,000 OX 3 40,000 OX 4 40,000 OX 5 40,000 OX 6 20,000 OX $ OX Which depreciation schedule would be more attractive to Lincoln? Option 1 Check