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Exam 3 - Chapters 9-13 instructions I help Question 55 (of 66) Save & Ext...

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Exam 3 - Chapters 9-13 instructions I help Question 55 (of 66) Save & Ext Submit 2.00 points You did not receive full credit for this question in a previous attempt Problem 12-28 MACRS depreciation and net present value [LO12-4] Oregon Forest Products will acquire new equipment that falls under the five-year MACRS category. The cost is $300,000. If the equipment is purchased, the following earnings before depreciation and taxes will be generated for the next six years. Use Table 12-12. Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Earnings before Depreciation S 110,000 120,000 75,000 50,000 56,000 33.000 The firm is in a 35 percent tax bracket and has a 13 percent cost of capital a. Calculate the net present value. (A negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places.) Net present valueS (9,604.00) b. Under the net present value method, should Oregon Forest Products purchase the equipment asset? O Yes No

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