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    Angiletta Corporation: PV of future cash flows, Book deprec

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    Angiletta Corporation is considering a new project requiring a $30,000 investment in test equipment with no salvage value. The project would produce $12,000 of pretax income before depreciation at the end of each of the next six years. The company's income tax rate is 40%. In compiling its tax return and computing its income tax payments, the company can choose between the two alternative depreciation schedules shown in the table.

    Straight-Line
    Depreciation MACRS
    Depreciation
    Year 1 $ 3,000 $ 6,000
    Year 2 6,000 9,600
    Year 3 6,000 5,760
    Year 4 6,000 3,456
    Year 5 6,000 3,456
    Year 6 3,000 1,728

    Totals $ 30,000 $ 30,000

    1. Compute the net present value of the investment if straight-line depreciation is used. Use 10% as the discount rate. (Round "PV Factor" to 4 decimal places. Round your intermediate calculations and final answer to the nearest dollar amount. Omit the "$" sign in your response.)

    2. Compute the net present value of the investment if MACRS depreciation is used. Use 10% as the discount rate. (Round "PV Factor" to 4 decimal places. Round your intermediate calculations and final answer to the nearest dollar amount. Omit the "$" sign in your response.)

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