Your company just spent $9,000,000 on equipment that has been classified as MACRS 7-year property. The half-year convention is considered to be appropriate for both MACRS and SL methods described below beginning with the first deduction to be claimed in year 1 when it is placed into service. Please compute the allowable depreciation for years 1-8 if the equipment is:
a. Depreciated using double declining balance switching to straight line.
b. Depreciated using the slower straight-line method.
c. Depreciated using 100% bonus depreciation.
d. Calculate the present worth (in time zero) of the tax savings generated from the deductions you calculated in part 3 of this homework for a, b, and c. Assume a tax rate of 25% and an i* = 15%.