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QUESTION 1 Carlos Bakery is looking to purchase a new oven. Capital and installation costs are $550,000. Carlos himself wishes to depreciate this expense in
QUESTION 1 Carlos Bakery is looking to purchase a new oven. Capital and installation costs are $550,000. Carlos himself wishes to depreciate this expense in a straight-line fashion over 4 years but you suggest that using a 4-year MACRS schedule (33.33% in year 1, 44,45% in year 2, 14.81% in year 3, and 7.41% in year 4). If the bakery's marginal tax rate is 25%, what is the NPV of choosing the MACRS schedule over a straight-line schedule if the discount rate is 9%? $11,446 59,539 $7.949 $5,520 $6,624
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