The Spartan Technology Company has a proposed contract with the Digital Systeme company ichigan. The initial investment in land and equipment will be $240,000 of this amount, $190,000 is subject to five MACRS preciation. The balance is in nondepreciable property. The contract covers six years, at the end of six years the moderable assets will be sold for $50,000. The depreciated assets will have zero resale value. Use Table 12.12 The contract will require an additional investment of $54.000 in working capital at the beginning of the first year and, of this amount, $34000 will be returned to the Spartan Technology Company after six years. The investment will produce $75.000 in income before depreciation and taxes for each of the six years. The corporation is in a 25 percent tax bracket and has a 8 percent cost of capital a. Calculate the net present value (Do not round intermediate calculations and round your answer to 2 decimal places.) Net present value b. Should the investment be undertaken? Yes No Table 12-12 Depreciation percentages (expressed in decim 10 Depreciation Year 3-Year MACRS 5-Year MACRS 7-Year MACRS 20-Year MACRS CRS 1 2 3. 0.333 0.445 0.148 0.074 0.200 0.320 0.192 0.115 0.115 0.058 4 H 0.143 0.245 0.175 0.125 0.089 0.089 0.089 0.045 5 100 0.18 0.14 0.115 0.092 0.074 0.066 0.066 0.065 0.065 0.033 7 0.050 0.095 0.086 0.077 0.069 0.062 0.059 0.059 0.059 0.059 0.059 0.059 0.059 0.059 0.059 0.030 9 10 11 12 13 14 15 16 17 18 19 20 21 0.038 0.072 0.067 0.062 0.057 0.053 0.045 0.045 0.045 0.045 0.045 0.045 0.045 0.045 0.045 0.045 0.045 0.045 0.045 0.045 0.017 1.000 ******** 1.000 1.000 1.000 1.000 1.000