Problem 12 28 MACRS depreciation and net present value LO4 Propulsion Labs will acquire new equipment that falls under the five year MACRS category The cost is $380,000 If the equipment is purchased, the following earnings before depreciation and taxes will be generated for the next six years Use Table 12 9 and Appendix B Year 1 $ 116,000 Year 2 168,000 Year 3 115,000 Year 4 62,000 Year 5 62,000 Year 6 37,000 The firm is in a 30 percent tax bracket and has a 12 percent cost of capital (a) Calculate the net present value (Negative amounts should be indicated by a minus sign Round PV Factor , Percentage depreciation to 3 decimal places, intermediate and final answers to the nearest dollar amount Omit the $ sign in your response ) Net present value $

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Question: Problem 12-28 MACRS depreciation and net present value [LO4] Propulsion Labs will acquire new equipment that falls under the five-year MACRS category. The cost is

Problem 12-28 MACRS depreciation and net present value [LO4]

Propulsion Labs will acquire new equipment that falls under the five-year MACRS category. The cost is $380,000. If the equipment is purchased, the following earnings before depreciation and taxes will be generated for the next six years:

Use Table 12-9 and Appendix B.


Year 1	$	116,000
Year 2		168,000
Year 3		115,000
Year 4		62,000
Year 5		62,000
Year 6		37,000

The firm is in a 30 percent tax bracket and has a 12 percent cost of capital.

(a)

Calculate the net present value. (Negative amounts should be indicated by a minus sign. Round "PV Factor", "Percentage depreciation" to 3 decimal places, intermediate and final answers to the nearest dollar amount. Omit the "$" sign in your response.)

Net present value

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