The Summit Petroleum Corporation will purchase an asset that qualifies for three-year MACRS depreciation. The cost is $300,000 and the asset will provide the following stream of earnings before depreciation and taxes for the next four years: Use Table 12-12.

Year 1	$	145,000
Year 2		191,000
Year 3		66,000
Year 4		64,000

The firm is in a 30 percent tax bracket and has a cost of capital of 5 percent. Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods.

a. Calculate the net present value. (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 Summit Petroleum Corporation purchase the asset?

	Yes
	No