Let's try this again...3rd times a charm maybe. I KNOW and have CONFIRMED the straight line depreciation present value = 45218. I need to solve for DDB method PV and then the cost advantage of using DDB.

NPV with Income Taxes: Straight-Line versus Accelerated Depreciation

Carl William, Inc. is a conservatively managed boat company whose motto is, "The old ways are the good ways." Management has always used straight-line depreciation for tax and external reporting purposes. Although they are reluctant to change, they are aware of the impact of taxes on a project's profitability.

Required For a typical $360,000 investment in equipment with a five-year life and no salvage value, determine the present value of the advantage resulting from the use of double-declining balance depreciation as opposed to straight-line depreciation Assume an income tax rate of 21% and a discount rate of 20%. Also assume that there will be a switch from doubledeclining balance to straight-line depreciation in the fourth year. What is the advantage resulting from the use of double-declining balance depreciation as opposed to straight-line depreciation? Note: Round your answers below to the nearest whole dollar.

What is the Present value of double-declining balance tax shield? =

What is the Advantage of double-declining balance depreciation? =