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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.)

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