Problem 12-27 (Static) MACRS depreciation and net present value [LO12-4] Universal Electronics is considering the purchase of manufacturng equipment with a 10year miupoint in its asset depreciation range (ADR). Carefully refer to Jable 12-11 to determine in what depreciation category the asset falls. (1-tint it is not to years) The asset wili ) cos$120,000, and it will produce eamings before depreciation and taxes of $37,000 per year for three years, and then $19,000 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 8 for an approximate answer but calculate your final answer using the formula and linancial calculator methods. a. Caiculate the net present value. Note: Do not round intermediate calculations and round your finol answer to 2 decimal places. b. Based on the net present value, should Universal Electronics purchase the asset? Yes Wrurat vathe of?1 1Vy Table 12-12 Depreciation percentages (expressed in decimals) Table 12-11 Categories for depreciation write-off