Which depreciation method would produce the higher npv, Financial Accounting

Assignment Help:

Wendy is evaluating a capital budgeting project that should last for 4 years. The project requires $ 800,000 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%, as discussed in Appendix 11A of our text book. The company's WACC is 10%, and its tax rate is 40%.
a. What would the depreciation expense be under each year under each method? (I have already answered this part of the question)
b. Which depreciation method would produce the higher NPV, and how much higher would it be?


Related Discussions:- Which depreciation method would produce the higher npv

Carriage inwards, difference between carriage inwards and carriage out ward...

difference between carriage inwards and carriage out wards

Prepare a statement of partnership liquidation, After discontinuing the ord...

After discontinuing the ordinary business operations and closing the accounts on May 7, the ledger of the partnership indicate the following: Cash $75,000 Non cash 105,000 Liabilit

our assumptions about consumer behavior, 5.    A stockholder named Sue mus...

5.    A stockholder named Sue must cast a vote for chair of the board. Sue prefers Mr. Lee to Ms. Doe, Ms. Doe to Mr. James, and Mr. James to Mr. Lee. a. Are Sue's preferences c

Horizontial and Vertical Analysis, #qUsing these data from the comparative ...

#qUsing these data from the comparative balance sheet of Junior Company, perform horizontal analysis. JUNIOR COMPANY

Fair value adjustments, explain the purpose and circumstances of using fair...

explain the purpose and circumstances of using fair values in preparing consolidated financial statements

Accounting for PPE, Acquisition of Assets: The cost method of accounting is...

Acquisition of Assets: The cost method of accounting is used for the initial recording of all acquisitions of assets controlled by the authority. Cost is determined as the fair val

Market value of the entire corporation, Company X is presumably doing well....

Company X is presumably doing well. The corporation's balance sheet last September 31 can be summarized as follows: Total Assets

Revenue and expense accounts, Are revenue and expense accounts permanent ac...

Are revenue and expense accounts permanent accounts and should not be closed at the end of the accounting period?

Define the term limited company- business ownership, Define the term Limite...

Define the term Limited company- business ownership Limited companies can range in size from quite small to very large. Number of individuals who subscribe capital and become

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd