Universal Electronics is considering the purchase of manufactuting equipment with a 10 -year midpoint in its asset depreciation range (ADR). Carefully refer to Table 12-11 to determine in what depreciation category the asset falls. (Hint it is not to years) The asset will cost $120,000, and it wili produce earnings before depreciation and taxes of $37,000 per year for three years, and then $19,000 a year for seven more years. The firm has a tax rate of 25 percent Assume the cost of capital is 12 percent In doing your analysis, if you have years in which there is no depreciation, merely enter a zero for dexreciation. Use Fable 1212 Use Appenclix B for an approximate answer but calculate your fintil answer using the formula and financial calculator methods: a. Calculate the net present value, Note: Do not round intermediate calculations and round your final answer to 2 decimal places. b. Based on the net present value, should Universal Electronics purchase the asset? Table 12-11 Categories for denreciation writonff Table 12-12 Depreciation percentages (expressed in decimals) \begin{tabular}{|c|c|c|c|c|c|c|} \hline Depreciation Year & 3-Year MACRS & 5Year MACRS & 7-Year MACRS & 10-Year MACRS & 15-Year MACRS & 20-Year MACRS \\ \hline 1 & 0.333 & 0.200 & 0.143 & 0.100 & 0.050 & 0.038 \\ \hline 2 & 0.445 & 0.320 & 0.245 & 0.180 & 0.095 & 0.072 \\ \hline 3 & 0.148 & 0.192 & 0.175 & 0.144 & 0.086 & 0.067 \\ \hline 4 & 0.074 & 0.115 & 0.125 & 0.115 & 0.077 & 0.062 \\ \hline 5 & & 0.115 & 0.089 & 0.092 & 0.069 & 0.057 \\ \hline 6 & & 0.058 & 0.089 & 0.074 & 0.062 & 0.053 \\ \hline 7 & & & 0.089 & 0.066 & 0.059 & 0.045 \\ \hline 8 & & & 0.045 & 0.066 & 0.059 & 0.045 \\ \hline 9 & & & & 0.065 & 0.059 & 0.045 \\ \hline 10 & & & & 0.065 & 0.059 & 0.045 \\ \hline 11 & & & & 0.033 & 0.059 & 0.045 \\ \hline 12 & & & & & 0.059 & 0.045 \\ \hline 13 & & & & & 0.059 & 0.045 \\ \hline 14 & & & & & 0.059 & 0.045 \\ \hline 15 & & & & & 0.059 & 0.045 \\ \hline 16 & & & & & 0.030 & 0.045 \\ \hline 17 & & & & & & 0.045 \\ \hline 13 & & & & & & 0.045 \\ \hline 19 & & & & & & 0.045 \\ \hline 20 & & & & & & 0.045 \\ \hline 21 & & & & & & 0.017 \\ \hline & 1.000 & 1.000 & 1.000 & 1.000 & 1000 & 1.000 \\ \hline & & & & & & \\ \hline \end{tabular} Appendix-B Frumentatizuts wvV