Question
Oregon Forest Products will acquire new equipment that falls under the five-year MACRS category. The cost is $460,000. 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 $460,000. 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 | $ | 149,000 | |||
| Year 2 | 200,000 | ||||
| Year 3 | 130,000 | ||||
| Year 4 | 83,000 | ||||
| Year 5 | 75,000 | ||||
| Year 6 | 42,000 | ||||
The firm is in a 25 percent tax bracket and has a 12 percent cost of capital.
a. Calculate the net present value.
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McGraw-Hill Education SAT 2017
Authors: Christopher Black, Mark Anestis
1st Edition
1259641651, 978-1259641657
