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. Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods.

		Earnings before Depreciation
Year 1		$	82,000
Year 2			110,000
Year 3			80,000
Year 4			51,000
Year 5			45,000
Year 6			28,000

The firm is in a 25 percent tax bracket and has a 11 percent cost of capital.

a. Calculate the net present value.

b. Under the net present value method, should Oregon Forest Products purchase the equipment asset?