The Summitt Petroleum Corporation will purchase an asset that qualifies for three-year MACRS depreciation. The cost is $260,000 and the asset will provide the following stream of earnings before depreciation and taxes for the next four years: Use Table 12-9.
Year 1 $116,000
Year 2 146,000
Year 3 56,000
Year 4 54,000
The firm is in a 30 percent tax bracket and has an 7 percent cost of capital. Use Appendix B
(a) Calculate the net present value. (Round "PV Factor" to 3 decimal places, intermediate calculations and final answer to the nearest whole dollar amount. Omit the "$" sign in your response.)