Disney needs to close Magic Kingdom to remodel and update the castle. Disney's advisors presented two renovation alternatives: (1) a quick facelift or (2) a complete rebuild. The quick facelift would cost $10 million, would generate annual after-tax cash flows of $3.75 million per year on completion, and would last only 5 years until another facelift was needed. The complete rebuild would cost $20 million, would also generate annual cash flows of $3.75 million per year on completion, and would last 11 years until another renovation was needed. Assume Disney always renovates-the Magic Kingdom when needed. What is the Equivalent Annual Annuity (EAA) for the option Disney should choose? Assume a cost of capital of 12.0%. David's Fine Kitchen purchased a $300000 machine that falls into Class 39 with a 25% depreciation rate. The machine is used for 4 years and then sold. Calculate the depreciation expense in year 2.