Calculate the net present value using the sum-of-the-years

Question

Problem

Basic capital budgeting problem with accelerated depreciation. Assume the same facts except that the earnings before depreciation, interest, and taxes is $22,000 per year.

• Calculate the net present value, using straight-line depreciation for tax purposes.
• Calculate the net present value, using the sum-of-the-years digits method of accelerated depreciation, for tax purposes.