Question
Oregon Forest Products will acquire new equipment that falls under the five-year MACRS category. The cost is $300,000. If the equipment is purchased, the following
Oregon Forest Products will acquire new equipment that falls under the five-year MACRS category. The cost is $300,000. If the equipment is purchased, the following earnings before depreciation and taxes will be generated for the next six years. Use Table 12-12.
| Earnings before Depreciation | |||||
| Year 1 | $ | 80,000 | |||
| Year 2 | 98,000 | ||||
| Year 3 | 70,000 | ||||
| Year 4 | 45,000 | ||||
| Year 5 | 36,000 | ||||
| Year 6 | 26,000 | ||||
The firm is in a 25 percent tax bracket and has a 12 percent cost of capital.
What Is the net present value?
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Innovation Audit Workbook
Authors: Langdon Morris
1st Edition
B08HBBKKPJ, 979-8682091614
