Propulsion Labs will acquire new equipment that falls under the five-year MACRS category. The cost is $200,000. If the equipment is purchased, the following earnings before depreciation and taxes will be generated for the next six years:
Year 1 $ 75,000
Year 2 70,000
Year 3 55,000
Year 4 35,000
Year 5 25,000
Year 6 21,000
The firm is in a 30 percent tax bracket and has a 14 percent cost of capital.
Calculate the net present value.
My answer is -$17,680, but it's is incorrect...any help would be wonderful! Thanks!
Year 1 $ 75,000
Year 2 70,000
Year 3 55,000
Year 4 35,000
Year 5 25,000
Year 6 21,000
The firm is in a 30 percent tax bracket and has a 14 percent cost of capital.
Calculate the net present value.
My answer is -$17,680, but it's is incorrect...any help would be wonderful! Thanks!