You are evaluating a capital budgeting project for your company that is expected to last for...

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You are evaluating a capital budgeting project for your companythat is expected to last for six years. The project begins with thepurchase of a $1,200,000 investment in equipment. You are unsurewhat method of depreciation to use in your analysis, straight-linedepreciation or the 5-year MACRS accelerated method. Straight-linedepreciation results in the cost of the equipment depreciatedevenly over its life. The 5-year MACRS depreciation rates are 20%,32%, 19%, 12%, 11%, and 6%. Your company's WACC is 10.5% and it hasa tax rate of 35%. For purposes of this question, we are ignoringthe half-year convention for the straight-line depreciation method.What is the NPV of the project given by the better depreciationmethod, i.e., the method that gives the higher NPV?
a. $17,500.00
b. $18,182.88
c. $21,250.75
d. $20,473.06
e. $16,333.33

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You are evaluating a capital budgeting project for your companythat is expected to last for six years. The project begins with thepurchase of a $1,200,000 investment in equipment. You are unsurewhat method of depreciation to use in your analysis, straight-linedepreciation or the 5-year MACRS accelerated method. Straight-linedepreciation results in the cost of the equipment depreciatedevenly over its life. The 5-year MACRS depreciation rates are 20%,32%, 19%, 12%, 11%, and 6%. Your company's WACC is 10.5% and it hasa tax rate of 35%. For purposes of this question, we are ignoringthe half-year convention for the straight-line depreciation method.What is the NPV of the project given by the better depreciationmethod, i.e., the method that gives the higher NPV?a. $17,500.00b. $18,182.88c. $21,250.75d. $20,473.06e. $16,333.33