Depreciation Methods: Straight-Line vs MACRS

Interactive tool for Lectures 13--14: Capital Budgeting. Shampoo factory case.

Asset & Method Parameters

Total Depreciable Basis: --
Useful Life: --
Year 1 Depreciation: --
Total Tax Shields (PV): --
Key Insight: MACRS front-loads depreciation, delivering tax shields sooner. Same total depreciation, but the time value of money makes MACRS more valuable.

Annual Depreciation Expense

Book Value Over Time

Cumulative PV of Tax Shields

Year-by-Year Breakdown

Year % Depreciated Depreciation $ Cumulative Depreciation Book Value Tax Shield (Annual) Tax Shield (PV)