Wendy is evaluating a capital budgeting project that should last for 4 years. Th

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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

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wendy is evaluating a capital budgeting project that should last for 4yrs.the project requires $800,000.00 of equipmentshe is unsure what depreciation method to use in her analyses, straight-line or the 3yrs macrs accelerated methods. under straight-line depreciation,the cos of equipment would be depreciated over its 4yr life . The applicable MACRS depreciation rates are 33%, 45%, 15%, and 7%, as discussed. The company's WACC is 10% and its tax rate is 40%.

What would the depreciation expense be each year under each method?

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