I am doing something wrong I am having trouble figuring out the NPV.

Universal Electronics is considering the purchase of manufacturing equipment with a 10-year midpoint in its asset depreciation range (ADR). Carefully refer to Table 1211 to determine in what depreciation category the asset falls. (Hint: It is not 10 years.) The asset will cost $120,000, and it will produce earnings before depreciation and taxes of $30,000 per year for three years, and then $20,000 a year for seven more years. The firm has a tax rate of 25 percent. Assume the cost of capital is 12 percent. In doing your analysis, if you have years in which there is no depreciation, merely enter a zero for depreciation. Use Table 1212. Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods.

Calculate the net present value.

Note: Do not round intermediate calculations and round your answer to 2 decimal places.

Based on the net present value, should Universal Electronics purchase the asset?

1. multiple choice

Yes

No

Universal Electronics is considering the purchase of manufacturing equipment with a 10-year midpoint in its asset depreciation range (ADR). Carefully refer to Table 12-11 to determine in what depreciation category the asset falls. (Hint: It is not 10 years.) The asset will cost $120,000, and it will produce earnings before depreciation and taxes of $30,000 per year for three years, and then $20,000 a year for seven more years. The firm has a tax rate of 25 percent. Assume the cost of capital is 12 percent. In doing your analysis, if you have years in which there is no depreciation, merely enter a zero for depreciation. Use Table 1212. 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. Note: Do not round intermediate calculations and round your answer to 2 decimal places. b. Based on the net present value, should Universal Electronics purchase the asset? Yes No Tahle 12.11 Cateanries for denreciation write-off Table 12-12 Denraciation narrantarac (avmmanand :-- lecimals) Universal Electronics is considering the purchase of manufacturing equipment with a 10-year midpoint in its asset depreciation range (ADR). Carefully refer to Table 12-11 to determine in what depreciation category the asset falls. (Hint: It is not 10 years.) The asset will cost $120,000, and it will produce earnings before depreciation and taxes of $30,000 per year for three years, and then $20,000 a year for seven more years. The firm has a tax rate of 25 percent. Assume the cost of capital is 12 percent. In doing your analysis, if you have years in which there is no depreciation, merely enter a zero for depreciation. Use Table 1212. 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. Note: Do not round intermediate calculations and round your answer to 2 decimal places. b. Based on the net present value, should Universal Electronics purchase the asset? Yes No Tahle 12.11 Cateanries for denreciation write-off Table 12-12 Denraciation narrantarac (avmmanand :-- lecimals)