Question: Please show work in excel with formulas (11-5) Depreciation Methods a Wendy's boss wants to use straight-line depreciation for the new expansion project because he
Please show work in excel with formulas
(11-5) Depreciation Methods a Wendy's boss wants to use straight-line depreciation for the new expansion project because he said it will give higher net income in earlier years and give him a larger bonus. The project will last 4 years and requires $1,700,000 of equipment. The company could use either 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 33.33%, 44.45%, 14.81%, and 7.41%, as discussed in Appendix 11A. The project cost of capital is 10%, and its tax rate is 25%. a. What would the depreciation expense be each year under each method? Answer + b. Which depreciation method would produce the higher NPV, and how much higher would it be? Answer c. Why might Wendy's boss prefer straight-line depreciation
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