MACRS depreciation and net present value
Propulsion Labs will acquire new equipment that falls under the five-year MACRS category. The cost is $260,000. 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 $ 78,000
Year 2 86,000
Year 3 60,000
Year 4 40,000
Year 5 33,000
Year 6 24,000
The firm is in a 40 percent tax bracket and has a 8 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: ___?___