Question
In: Finance
Oregon Forest Products will acquire new equipment that falls under the five-year MACRS category. The cost...
Oregon Forest Products will acquire new equipment that falls
under the five-year MACRS category. The cost is $300,000. 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 | $ | 82,000 | |||
| Year 2 | 110,000 | ||||
| Year 3 | 80,000 | ||||
| Year 4 | 51,000 | ||||
| Year 5 | 45,000 | ||||
| Year 6 | 28,000 | ||||
The firm is in a 25 percent tax bracket and has a 11 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?
Solutions
jeff jeffy answered 2 years agoRelated Solutions
Oregon Forest Products will acquire new equipment that falls under the five-year MACRS category. The cost...
Oregon Forest Products will acquire new equipment that falls
under the five-year MACRS category. The cost is $300,000. 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
$
110,000
Year 2
120,000
Year 3
75,000
Year 4
50,000
Year 5
56,000
Year...
Oregon Forest Products will acquire new equipment that falls under the five-year MACRS category. The cost...
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...
Oregon Forest Products will acquire new equipment that falls under the five-year MACRS category. The cost...
Oregon Forest Products will acquire new equipment that falls
under the five-year MACRS category. The cost is $220,000. 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
$
76,000
Year 2
73,000
Year 3
56,000
Year 4
38,000
Year 5
27,000
Year...
Oregon Forest Products will acquire new equipment that falls under the five-year MACRS category. The cost...
Oregon Forest Products will acquire new equipment that falls
under the five-year MACRS category. The cost is $420,000. 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
$
135,000
Year 2
182,000
Year 3
125,000
Year 4
68,000
Year 5
69,000
Year...
Oregon Forest Products will acquire new equipment that falls under the five-year MACRS category. The cost...
Oregon Forest Products will acquire new equipment that falls
under the five-year MACRS category. The cost is $360,000. 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 $ 115,000 Year 2 162,000 Year 3
110,000 Year 4 59,000 Year 5 59,000 Year...
Oregon Forest Products will acquire new equipment that falls under the five-year MACRS category. The cost...
Oregon Forest Products will acquire new equipment that falls
under the five-year MACRS category. The cost is $300,000. 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 $ 110,000 Year 2 120,000 Year 3
75,000 Year 4 50,000 Year 5 56,000 Year...
Oregon Forest Products will acquire new equipment that falls under the five-year MACRS category. The cost...
Oregon Forest Products will acquire new equipment that falls
under the five-year MACRS category. The cost is $500,000. 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
$
150,000
Year 2
200,000
Year 3
110,000
Year 4
92,000
Year 5
82,000
Year...
Oregon Forest Products will acquire new equipment that falls under the five-year MACRS category. The cost...
Oregon Forest Products will acquire new equipment that falls
under the five-year MACRS category. The cost is $300,000. 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 $ 80,000 Year 2 98,000 Year 3
70,000 Year 4 45,000 Year 5 36,000 Year...
1. Oregon Forest Products will acquire new equipment that falls under the five-year MACRS category. The...
1. Oregon Forest Products will acquire new equipment
that falls under the five-year MACRS category. The cost is
$300,000. 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
$
82,000
Year 2
110,000
Year 3
80,000
Year 4
51,000
Year 5
45,000...
The company is evaluating new equipment that will cost $2,000,000. The equipment is in the MACRS...
The company is evaluating new equipment that will cost
$2,000,000. The equipment is in the MACRS 3-year class and will be
sold after 3 years for $150,000. Use of the equipment will increase
net working capital by 200,000. The equipment
will save $850,000 in operating costs each year
for 3 years. The company's tax rate is 25 percent
and its cost of capital is 12%. Please show formulas in
Excel.
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