Calculate the net present value

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Reference no: EM131999195

The Summit Petroleum Corporation will purchase an asset that qualifies for three-year MACRS depreciation. The cost is $250,000 and the asset will provide the following stream of earnings before depreciation and taxes for the next four years: Use Table 12-12.


Year 1	$	122,000
Year 2		155,000
Year 3		58,000
Year 4		56,000

The firm is in a 30 percent tax bracket and has a cost of capital of 16 percent. Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods.

Calculate the net present value.

(Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places.)

Reference no: EM131999195

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