Oregon forest products purchase the equipment asset

Assignment Help Financial Management

Reference no: EM132024260

Oregon Forest Products will acquire new equipment that falls under the five-year MACRS category. The cost is $330,000. If the equipment is purchased, the following earnings before depreciation and taxes will be generated for the next six years. Use Table 12-12. Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. Earnings before Depreciation Year 1 $ 111,000 Year 2 130,000 Year 3 95,000 Year 4 57,000 Year 5 48,000 Year 6 31,000 The firm is in a 30 percent tax bracket and has a 12 percent cost of capital. a. Calculate the net present value. b. Under the net present value method, should Oregon Forest Products purchase the equipment asset? Yes No

Reference no: EM132024260

Questions Cloud

Two possible ways to measure investor earnings expectations : List two possible ways to measure investor’s earnings expectations

Consider binomial experiment with two trials : Consider a binomial experiment with two trials and p = .4. List all of the possible outcomes for the two trials.

About the debt and equity of firm in view of option theory : Which of the following is INCORRECT about the debt and equity of a firm in view of option theory?

What is discounted payback period for these cash flows : What is the discounted payback period for these cash flows if the initial cost is $6,000? What if the initial cost is $9,000? What if it is $13000?

Oregon forest products purchase the equipment asset : Calculate the net present value. Under the net present value method, should Oregon Forest Products purchase the equipment asset?

What type of investment/ wealth management product : What type of Investment/ Wealth Management Product would you recommend to 29-year-old Tom? Why have you made this selection?

What would the gordon model value : Using data from part a, what would the Gordon (constant growth) model value be if the required rate of return was 15%

How long will it take to pay off loan : How long will it take to pay off a loan of $55,000 at an annual rate of 8% compounded monthly if you make monthly payments of $550 ?

Investment net present value and internal rate of return : Calculate the investment's net present value (NPV) and internal rate of return (IRR).

User Account

All Pages