6. Problem 12.06 (Depreciation Methods) eBook Charlene is evaluating a capital budgeting project that should...
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6. Problem 12.06 (Depreciation Methods) eBook Charlene is evaluating a capital budgeting project that should last for 4 years. The project requires $175,000 of equipment and is eligible for 100% bonus depreciation. She is unsure whether immediately expensing the equipment or using straight-line depreciation better for the analysis. 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 company's WACC is 12%, and its tax rate is 30%. a. What would the depreciation expense be each year under each method? Enter your answers as positive values. Round your answers to the nearest dollar. Year Scenario 1 (Straight-Line) $ Scenario 2 (Bonus Depreciation) $ 0 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? Do not round intermediate calculations. Round your answer to the nearest dollar. $ Grade it Now Save & Continue Continue without saying
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