The Summit Petroleum Corporation will purchase an asset thatqualifies for three-year MACRS depreciation. The cost is $120,000and the asset will provide the following stream of earnings beforedepreciation and taxes for the next four years: Use Table 12-12.Year 1 $ 54,000 Year 2 66,000 Year 3 38,000 Year 4 29,000 The firmis in a 35 percent tax bracket and has a cost of capital of 12percent. Use Appendix B for an approximate answer but calculateyour final answer using the formula and financial calculatormethods. a. Calculate the net present value. (Negative amountshould be indicated by a minus sign. Do not round intermediatecalculations and round your answer to 2 decimal places.)
