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This is the question Green Company is trying to plan ahead for upcoming income tax changes expected after the 2020 election. Green is considering acquiring

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Green Company is trying to plan ahead for upcoming income tax changes expected after the 2020 election. Green is considering acquiring an asset in January 2021 for a cost of $600,000 that will last for seven years and have a residual value of $40,000 at that time. The asset is expected to bring in net cash benefits of $200,000 a year before income taxes over the life of the project. Green's accountant is trying to chose the best depreciation method, i.e., the one that contributes to the maximum Net Present Value of the project, given the expected applicable income tax rates: Year 2021 2022 2023 2024 2025 2026 2027* Tax Rates 25% 30% 35% 40% 40% 45% 45% * Rates are expected to remain at 45% after 2027. For income tax purposes, the company will depreciate the asset over a five-year period to a zero salvage value using either the Straight-line method or the Sum-of-the-Years' Digits method. Required: a. Using the company's 10% required rate of return, determine which method leads to the greatest NPV and the amount by which if exceeds the next best alternative. b. Is there a required rate of return where the two methods would provide identical NPV's? If so, what is it

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