Oregon Forest Products will acquire new equipment that falls under the five-year MACRS category. The cost is $420,000. If theequipment is purchased, the following earnings before depreciation and taxes will be generated for the next six years. Use Table 12-12.Year 1Year 2Year 3Year 4Year 5Year 6EarningsbeforeDepreciation$135,000182,000125,00068,00069,00039,000The firm is in a 25 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 calculationsand round your answer to the nearest whole dollar amount.)Net present value

NPV is a capital budgeting technique helps to determine the profitability of the capital investment…

Answered: Oregon Forest Products will acquire new…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 21P

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es Oregon Forest Products will acquire new equipment that falls under the five-year MACRS category. The cost is $500,000. If the equipment is purchased, the following earnings before depreciation and taxes will be generated for the next six years. Use Table 12. 12. Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Earnings before Depreciation $150,000 200,000 110,000 92,000 82,000 45,000 The firm is in a 25 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 the nearest whole dollar amount.) Net present value b. Under the net present value method, should Oregon Forest Products purchase the equipment asset? Yos O No
Oregon Forest Products will acquire new equipment that falls under the five-year MACRS category. The cost is $320,000. If the equipment is purchased, the following earnings before depreciation and taxes will be generated for the next six years. Use Table 12- 12. Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Earnings before Depreciation $ 83,000 120,000 85,000 52,000 46,000 29,000 The firm is in a 25 percent tax bracket and has a 8 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 the nearest whole dollar amount.) Answer is complete but not entirely correct. Net present value $ 7,370.00 X b. Under the net present value method, should Oregon Forest Products purchase the equipment asset? Yes x No
Oregon Forest Products will acquire new equipment that falls under the five-year MACRS category. The cost is $280,000. if the equipment is purchased, the following earnings before depreciation and taxes will be generated for the next six years. Use Table 12- 12 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Earnings before Depreciation $79,000 92,000 65,000 44,000 34,000 25,000 The firm is in a 25 percent tax bracket and has a 9 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 the nearest whole dollar amount.) Not present value
Please correct answer and don't use hand rating
A machine can be purchased for $50,000 and used for five years, yielding the following income. This income computation includes annual depreciation expense of $10,000. Income Year Year 1 $3,300 Initial invest Year 1 Year 2 Year 3 Year 4 Year 5 Year 2 $8,300 Compute the machine's payback period. Note: Round payback period answer to 2 decimal places. Net Income Depreciation 3,300 8,300 30,000 12,400 33,200 Year 3 $30,000 Year 4 $12,400 Net Cash Flow $ (50,000) $ Payback period = Year 5 $33,200 Cumulative Net Cash Flow (50,000) 0 0
Current Attempt in Progress A company purchases new cement manufacturing assets that cost $17 million. This is classified in the 15-year property class using MACRS-GDS. What would be the depreciation allowance and book value at the end of years 1 and 3 using MACRS with 50% bonus depreciation? Click here to access the TVM Factor Table Calculator. Depreciation allowance at the end of year 1: $ Book value at the end of year 1: $ Depreciation allowance at the end of year 3: $ Book value at the end of year 3: IA million million million million + 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 3.5
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Depreciation A firm is evaluating the acquisition of an asset that costs $69,800 and requires $3,830 in installation costs. If the firm depreciates the asset under MACRS, using a 5-year recovery period (see table 9), determine the depreciation charge for each year. Data Table The annual depreciation expense for year 1 will be $ (Round to the nearest dollar.) The annual depreciation expense for year 2 will be $ (Round to the nearest dollar.) (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a The annual depreciation expense for year 3 will be $ (Round to the nearest dollar.) spreadsheet.) The annual depreciation expense for year 4 will be $ (Round to the nearest dollar.) Rounded Depreciation Percentages by Recovery Year Using MACRS for First Four Property Classes The annual depreciation expense for year 5 will be $ Percentage by recovery year* 5 years (Round to the nearest dollar.) Recovery year 3 years 7 years 10 years The…
A parcel of land can be leased for a period of 10 years. Initial development costs for clearing, paving and constructing a small office shed on the lot is estimated to be P250, 000. If the net annual revenue for the first year is P22, 000 and increases by 5% per year thereafter until the tenth year. What is the equivalent uniform net annual revenue for ten years if interest per year is 8%? a. P25,087 b. P26,831 c. P18,038 d. P19,987
Engineering Economics problem. Help me for the solution
Ashavinbhai

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