Question

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

Oregon Forest Products will acquire new equipment that falls under the five-year MACRS category. The cost is $440,000. If the equipment is purchased, the following earnings before depreciation and taxes will be generated for the next six years. Use Table 12-12.

Earnings before Depreciation
Year 1 $ 125,000
Year 2 175,000
Year 3 120,000
Year 4 80,000
Year 5 71,000
Year 6 41,000


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.)

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Oregon Forest Products will acquire new equipment that falls under the five-year MACRS category. The cost...
Oregon Forest Products will acquire new equipment that falls under the five-year MACRS category. The cost is $440,000. 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. Earnings before Depreciation Year 1 $ 120,000 Year 2 190,000 Year 3 130,000 Year 4 71,000 Year 5 70,000 Year...
Oregon Forest Products will acquire new equipment that falls under the five-year MACRS category. The cost...
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. Earnings before Depreciation Year 1 $ 110,000 Year 2 120,000 Year 3 75,000 Year 4 50,000 Year 5 56,000 Year...
Oregon Forest Products will acquire new equipment that falls under the five-year MACRS category. The cost...
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. Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. Earnings before Depreciation Year 1 $ 160,000 Year 2 215,000 Year 3 125,000 Year 4 89,000 Year 5 78,000 Year...
Oregon Forest Products will acquire new equipment that falls under the five-year MACRS category. The cost...
Oregon Forest Products will acquire new equipment that falls under the five-year MACRS category. The cost is $480,000. 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. Earnings before Depreciation Year 1 $ 150,000 Year 2 190,000 Year 3 120,000 Year 4 86,000 Year 5 76,000 Year...
Oregon Forest Products will acquire new equipment that falls under the five-year MACRS category. The cost...
Oregon Forest Products will acquire new equipment that falls under the five-year MACRS category. The cost is $460,000. 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. Earnings before Depreciation Year 1 $ 149,000 Year 2 200,000 Year 3 130,000 Year 4 83,000 Year 5 75,000 Year...
Problem 12-28 MACRS depreciation and net present value [LO12-4] Oregon Forest Products will acquire new equipment...
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 $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. Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. Earnings before Depreciation Year 1 $ 160,000 Year 2 215,000 Year...
Propulsion Labs will acquire new equipment that falls under the five-year MACR category. The cost is...
Propulsion Labs will acquire new equipment that falls under the five-year MACR category. The cost is $200 000. If the equipment is purchased, the following earnings before depreciation and taxes will be generated for the next six years:The firm is in a 30 percent tax bracket and has a 14 percent cost of capital. Should Propulsion purchase the equipment? Use NPV method. What is the lowest return interest of this investment? Year Cash flow 1 $5 000 2 70 000...
The Spartan Technology Company has a proposed contract with the Digital Systems Company of Michigan. The...
The Spartan Technology Company has a proposed contract with the Digital Systems Company of Michigan. The initial investment in land and equipment will be $240,000. Of this amount, $190,000 is subject to five-year MACRS depreciation. The balance is in nondepreciable property. The contract covers six years; at the end of six years, the nondepreciable assets will be sold for $50,000. The depreciated assets will have zero resale value. Use Table 12-12. The contract will require an additional investment of $54,000...
An asset was purchased three years ago for $110,000. It falls into the five-year category for...
An asset was purchased three years ago for $110,000. It falls into the five-year category for MACRS depreciation. The firm is in a 25 percent tax bracket. Use Table 12–12. a. Compute the tax loss on the sale and the related tax benefit if the asset is sold now for $14,060. (Input all amounts as positive values. Do not round intermediate calculations and round your answers to whole dollars.) b. Compute the gain and related tax on the sale if...
An asset was purchased three years ago for $155,000. It falls into the five-year category for...
An asset was purchased three years ago for $155,000. It falls into the five-year category for MACRS depreciation. The firm is in a 25 percent tax bracket. Use Table 12–12. a. Compute the tax loss on the sale and the related tax benefit if the asset is sold now for $18,560. (Input all amounts as positive values. Do not round intermediate calculations and round your answers to whole dollars.) b. Compute the gain and related tax on the sale if...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT