About the macrs depreciation and net present value

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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: ___?___

Reference no: EM131909191

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