Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. chemise is evaluating a capital budgeting project

Chemise is evaluating a capital budgeting project that will last for 4 years. The project...

60.1K

Verified Solution

Question

Finance

Chemise is evaluating a capital budgeting project that will last for 4 years. The project requires $375,000 of equipment. She is wondering about which depreciation method will be better, straight-line or MACRS. The MACRS rates are 33%, 45%, 15%, and 7% over years 1 to 4, respectively. The company's WACC is 10% and its marginal tax rate is 27%. Which method would produce the higher NPV and how much higher would it be?

MACRS will produce a higher NPV and it will be 2,841.26 higher

MACRS will produce a higher NPV and it will be 3,339.60 higher

MACRS will produce a higher NPV and it will be 4,044.19 higher

Straight-line depreciation will produce a higher NPV and it will be 2,841.26 higher

Straight-line depreciation will produce a higher NPV and it will be 3,339.60 higher

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

Find fraction equivalents for the following decimals. A. 0.8 (repeating .8) B. 3.08 (repeating .08) C. 3.08 (repeating...

Basic Math
Q

create verilog source files for a seven segment display using the software vivado. show your steps.

Electrical Engineering
Q

Problem 9-07 (Algorithmic) As part of the settlement for a class action lawsuit, Hoxworth Corporation must...

Basic Math
Q

Find the contrapositive of the conditional"You are a vegetarian if you do not eat meat."....

Basic Math
Q

Write a polynomial function that has given zeros with the listed multiplicities In each problem...

Algebra
Q

Solve the equation 3 4x 3 4 6x 1 43

Algebra
Q

scroll to the bottom for the beginning thank u. ...

Accounting
Q

Match the following: Descriptions 1) Provide additional financing, often in the millions, for a percentage...

Accounting
Q

Purchase Discounts (Periodic System) Murphy Company purchased merchandise of $40,000, terms 2/10, n/30. Periodic System...

Accounting
Q

Blossom Hovercraft Inc. reported the following shareholders' equity: Preferred shares, 100,000 shares authorized, ...

Accounting
Q

3. Karen is a 20% partner in Smith Partners. The other interests in the partnership...

Accounting
Q

Exercise 9-7 (Algo) Flexible Budgets and Activity Variances [LO9-1, LO9-2] Jake's Roof Repair has provided...

Accounting