1. Kristin is evaluating a capital budgeting project that should last 4 years. The project requires $625,000 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 for the straight-line method). The applicable MACRS depreciation rates are 33%,45%,15%,7% as discussed in Appendix 12A. The companys WACC is 14%, and its tax rate is 40%. a. What would the depreciation expense be each year under each method? b. Which depreciation method would produce the higher NPV and how much higher would it be? 2.Mississippi River Shipyards is considering replacing an 8-year-old riveting machine with a new one that will increase earnings before depreciation from $24,000 to $44,000 per year. The new machine will cost $82,500 and it will have an estimated life of 8 years and no salvage value. The new machine will be depreciated over its 5-year MACRS recovery period; so the applicable depreciation rates are 20%, 32%, 19%, 12%, 11% and 6%. The applicable corporate tax rate is 40%, and the firms WACC is 14%. The old machine has been fully depreciated and has no salvage value. Should the old riveting machine be replaced by the new one? Explain your answer. (Hint: use NPV) 3.The equipment orginally cost 23 million, of which 75% has been depreciated. Kennedy can sell the used equipment today for $5.75 million, and its tax rate is 35%. What is the equipments after-tax net salvage value?