XYZ Ltd. has purchased machinery for $50,000. The machinery has an expected useful life of 10 years and a residual value of $5,000.

1. Calculate the annual depreciation expense using the straight-line method.
2. Calculate the depreciation expense for the first two years using the double-declining balance method.
3. Graph the depreciation expense over the 10 years using both methods.
4. Discuss the impact of each depreciation method on the financial statements and tax liabilities.