! Required Information [The following information applies to the questions displayed below.] Manning Corporation is considering a new project requiring a $90,000 investment in test equipment with no salvage value. The project would produce $70,000 of pretax income before depreciation at the end of each of the next six years. The company's income tax rate is 36%. In compiling its tax return and computing its income tax payments, the company can choose between the two alternative depreciation schedules shown in the table. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use MACRS) (Use appropriate factor(s) from the tables provided.) Straight-Line MACRS Depreciation Depreciation* $ 9,000 $18,000 18,000 28,800 18,000 17,280 Year 4 18,000 10,368 18,000 10,368 Year 6 9,000 5,184 Totals $90,000 $90,000 Year 1 Year 2 Year 3 Year 5 * The modified accelerated cost recovery system (MACRS) for depreciation is discussed in Chapter 8. 3. Compute the net present value of the investment if straight-line depreciation is used. Use 10% as the discount rate. Chart Values are Based on: Year Net Cash Inflow X PV Factor = Present Value 1 2 3 4 5 = 6 = Net present value