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the select option is either Straight-line or MACRS thank u in advance DEPRECIATION METHODS Charlene is evaluating a capital budgeting project that should last for
the "select" option is either "Straight-line" or "MACRS"
thank u in advance
DEPRECIATION METHODS Charlene is evaluating a capital budgeting project that should last for 4 years. The project requires $175,000 of equipment. She is unsure what depreciation method to use in her analysis, straight-line or the 3-year MACRS accelerated method. Under straight-line depreciation, the cost of the equipment would be depreciated evenly over its 4-year life (ignore the half-year convention for the straight-line method). The applicable MACRS depreciation rates are 33%, 45%, 15%, and 7%. The company's WACC is 10%, and its tax rate is 40%. a. What would the depreciation expense be each year under each method? Round your answers to the nearest cent. Year Scenario 1 Scenario 2 (Straight-Line) (MACRS) 1 2 3 4 b. Which depreciation method would produce the higher NPV? -Select- How much higher would the NPV be under the preferred method? Round your answer to two decimal places. Do not round your intermediate calculations. $Step by Step Solution
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