Question: Brevard Publishing is evaluating a capital budgeting project that should last for 4 years. The project requires $800,000 of equipment and is eligible for 100%
Brevard Publishing is evaluating a capital budgeting project that should last for 4 years. The project requires $800,000 of equipment and is eligible for 100% bonus depreciation. Brevard is unsure whether immediately expensing the equipment or using straight-line depreciation is better for the analysis. Under straight-line depreciation, the cost of the equipment would be depreciated evenly over its 4-year life. The companys WACC is 8%, and its tax rate is 25%. What would the depreciation expense be each year under each method? Answer in the form: x, y.
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