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The Summit Petroleum Corporation will purchase an asset that qualifies for three-year MACRS depreciation. The cost is $120,000 and the asset will provide the following
The Summit Petroleum Corporation will purchase an asset that qualifies for three-year MACRS depreciation. The cost is $120,000 and the asset will provide the following stream of eamings before depreciation and taxes for the next four years: Use Table 12-12. Year 1 $52,000 Year 2 60,000 Year 4 27,000 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? O Yes O No
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