Problem 12-28 MACRS depreciation and net present value [LO4]

Propulsion Labs will acquire new equipment that falls under the five-year MACRS category. The cost is $380,000. If the equipment is purchased, the following earnings before depreciation and taxes will be generated for the next six years:

Use Table 12-9 and Appendix B.

Year 1	$	116,000
Year 2		168,000
Year 3		115,000
Year 4		62,000
Year 5		62,000
Year 6		37,000

The firm is in a 30 percent tax bracket and has a 12 percent cost of capital.

(a)	Calculate the net present value. (Negative amounts should be indicated by a minus sign. Round "PV Factor", "Percentage depreciation" to 3 decimal places, intermediate and final answers to the nearest dollar amount. Omit the "$" sign in your response.)

Net present value

$