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. UseTable 12-12. UseAppendix Bfor an approximate answer but calculate your final answer using the formula and financial calculator methods. |
| Year 1 | $ | 112,000 |
| Year 2 | 105,000 | |
| Year 3 | 82,000 | |
| Year 4 | 53,000 | |
| Year 5 | 37,000 | |
| Year 6 | 32,000 |
The firm is in a 30 percent tax bracket and has a 14 percent cost of capital. |
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Cases in Finance
Authors: Jim DeMello
3rd edition
1259330476, 1259330478, 9781259352652 , 978-1259330476
