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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
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
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