Oregon Forest Products will acquire new equipment that falls under the five-year MACRS category. The cost is $240,000. 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 $ 77,000

Year 2 78,000

Year 3 57,000

Year 4 39,000

Year 5 29,000

Year 6 23,000

The firm is in a 35 percent tax bracket and has a 12 percent cost of capital.

a. Calculate the net present value. (A negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places.)

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