Oregon Forest Products will acquire new equipment that falls under the five-year MACRS category. The cost is $340,000. 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.

Year 1 $ 121,000

Year 2 $140,000

Year 3 $100,000

Year 4 $60,000

Year 5 $ 55,000

Year 6 $32,000

The firm is in a 40 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.)

Net present value $________

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

Yes Or No _______