Oregon Forest Products will acquire new equipment that falls under the five-year MACRS category. The cost is $340,000. 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 $ 106,000 160,000 105,000 56,000 58,000 35,000 The firm is in a 25 percent tax bracket and has a 13 percent cost of capital. a. Calculate the net present value. Note: 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 not complete. Net present value
Oregon Forest Products will acquire new equipment that falls under the five-year MACRS category. The cost is $340,000. 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 $ 106,000 160,000 105,000 56,000 58,000 35,000 The firm is in a 25 percent tax bracket and has a 13 percent cost of capital. a. Calculate the net present value. Note: 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 not complete. Net present value
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text:Oregon Forest Products will acquire new equipment that falls under the five-year MACRS category. The cost is $340,000. 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
$ 106,000
160,000
105,000
56,000
58,000
35,000
The firm is in a 25 percent tax bracket and has a 13 percent cost of capital.
a. Calculate the net present value.
Note: 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 not complete.
Net present value
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