The Summit Petroleum Corporation will purchase an asset that qualifies for three-year MACRS depreciation. The cost is $430,000 and the asset will provide the following stream of earnings before depreciation and taxes for the next four years: Use Table 12-12 Year 1 Year 2 Year 3 Year 4 $200,000 245,000 84,000 76,000 The firm is in a 40 percent tax bracket and has a cost of capital of 12 percent. Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. a. Calculate the net present value. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places.)
The Summit Petroleum Corporation will purchase an asset that qualifies for three-year MACRS depreciation. The cost is $430,000 and the asset will provide the following stream of earnings before depreciation and taxes for the next four years: Use Table 12-12 Year 1 Year 2 Year 3 Year 4 $200,000 245,000 84,000 76,000 The firm is in a 40 percent tax bracket and has a cost of capital of 12 percent. Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. a. Calculate the net present value. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places.)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter19: Capital Investment
Section: Chapter Questions
Problem 18E
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Question
hh.2
![The Summit Petroleum Corporation will purchase an asset that qualifies for three-year MACRS depreciation. The cost is $430,000 and
the asset will provide the following stream of earnings before depreciation and taxes for the next four years: Use Table 12-12
Year 1
Year 2
Year 3
Year 41
$200,000
245,000
84,000
76,000
The firm is in a 40 percent tax bracket and has a cost of capital of 12 percent. Use Appendix B for an approximate answer but calculate
your final answer using the formula and financial calculator methods.
a. Calculate the net present value. (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](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe3a74b4d-94d5-4efa-a2b6-25f8cd8a9b81%2F58868ce5-b14f-4ed9-a34d-050c860afd55%2Frqzhl8_processed.jpeg&w=3840&q=75)
Transcribed Image Text:The Summit Petroleum Corporation will purchase an asset that qualifies for three-year MACRS depreciation. The cost is $430,000 and
the asset will provide the following stream of earnings before depreciation and taxes for the next four years: Use Table 12-12
Year 1
Year 2
Year 3
Year 41
$200,000
245,000
84,000
76,000
The firm is in a 40 percent tax bracket and has a cost of capital of 12 percent. Use Appendix B for an approximate answer but calculate
your final answer using the formula and financial calculator methods.
a. Calculate the net present value. (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
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