Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

net present value The Summit Petroleum Corporation will purchase an asset that qualifies for three year MACRS depreciation The cost is $180.000 and the asset

net present value
image text in transcribed
image text in transcribed
The Summit Petroleum Corporation will purchase an asset that qualifies for three year MACRS depreciation The cost is $180.000 and the asset will provide the following stream of earnings before depreciation and taxes for the next four years. Use table 122 ts Year 1 Year 2 Year 3 Year 4 $ 96,000 110,000 48,000 46,000 The firm is in a 35 percent tax bracket and has a cost of capital of 12 percent. Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. a. Calculate the net present value. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places.) fable 12-12 Depreciation percentages (expressed in decimals) Depreciation Year 3-Year MACRS 5-Year MACRS 7-Year MACRS 10-Year MAGRS 15-Year MACRS 20-Year MACRS 2. 0.333 0.445 0.148 0.074 3 0.200 0.320 0.192 0.115 0.115 0.058 0.143 0.245 0.175 0.125 0.089 0.089 0.089 0.045 5 6 7 0.100 0.180 0.144 0.115 0.092 0.074 0.066 0.066 0.065 0.065 0.033 8 ......... NO 0 0.050 0.095 0.086 0.077 0.069 0.062 0.059 0.059 0.059 0.059 0.059 0.059 0.059 0.059 0.059 0.030 9 10 11 12 13 14 15 16 17 18 19 20 21 0.038 0.072 0.067 0.062 0.057 0.053 0.045 0.045 0.045 0.045 0.045 0.045 0.045 0.045 0.045 0.045 0.045 0.045 0.045 0.045 0.017 1.000 1.000 1.000 1.000 1.000 1.000

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Audit Process Principles Practice And Cases

Authors: Stuart Manson, Iain Gray, Iain G. Sheffield, I.H. Gray, I. Etal Gray

2nd Edition

1861520107, 9781861520104

More Books

Students also viewed these Accounting questions

Question

Demonstrate three aspects of assessing group performance?

Answered: 1 week ago