Charlene is evaluating a capital budgeting project that


Charlene is evaluating a capital budgeting project that should last for 4 years. The project requires $200,000 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%. The company's WACC is 10%, and its tax rate is 40%. What would the depreciation expense be each year under each method? Round your answers to the nearest cent.

Request for Solution File

Ask an Expert for Answer!!
Financial Management: Charlene is evaluating a capital budgeting project that
Reference No:- TGS02775255

Expected delivery within 24 Hours