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Forest Products will acquire new equipment that falls under the five-year MACRS category. The cost...

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Accounting

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Forest Products will acquire new equipment that falls under the five-year MACRS category. The cost is $320,000. f the equipment is purchased, the following Table 12-12. Use Appendix B for an approximate answer but calculate your final earnings before depreciation and taxes will be generated for the next six years. Use answer using the formula and financial calculator methods. Earnings before Depreciat Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 $110,000 125,000 90,000 54,000 47,000 30,000 The firm is in a 30 percent tax bracket and has a 12 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 value b. Under the net present value method, should Oregon Forest Products purchase the equipment asset? O Yes No

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