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 $700,000 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 9%, and its tax rate is 40%. a.What would the depreciation expense be each year under each method? Year 1 Scenario 1 (Straight Line) year 1 $ 2 $ 3 $ 4 $ Scenario 2 (MACRS) year 1 $ 2 $ 3 $ 4 $ b.Which depreciation method would produce the higher NPV? Scenario 1Scenario 2 ? C How much higher would it be? Round your answer to the nearest dollar.

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