Question $28$

Carlos' Bakery is looking to purchase a new oven. Capital and installation costs are $$730,000.$ 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 in year $1,44\mathrm{.}45\%$

in year $2,14\mathrm{.}81\%$ in year $3,$ and $7\mathrm{.}41\%$ in year $4).$ If the bakery's marginal tax rate is $20\%,$ what is the NPV of choosing the MACRS schedule over a straight$-$line schedule if the discount rate is $10\%?$

$$7,664$

$$13,244$

$$9,197$

$$11,037$

$$6,387$