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Problem 12-27 MACRS depreciation and net present value L012-4] provide the following stream of earnings...

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Problem 12-27 MACRS depreciation and net present value L012-4] provide the following stream of earnings before depreciation and taxes for the next four years: Use Table 12-12 Year s 98,000 Year 119,000 The Summit Petroleum Corporation will purchase an asset that qualifies for three-year MACRS depreciation. The cost is $200,000 and the asset will 2 Year 50,000 Year 48,000 4 The firm is in a 36 percent tax bracket and has a cost of capital of 7 percent. Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. a. 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.) Net present value b. Under the net present value method, should Summit Petroleum Corporation purchase the asset? O Yes O No

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