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PART FIVE Long-Term Investment Decisions EADSHEET EXERCISE Damon Corporation, a sports equipment manufacturer, has a machine currently in use that was originally purchased 3 years ago for $120,000. The firm depreciates the machine under MACRS, using a 5-year recovery period. Once removal and clean costs are taken into consideration, the expected net selling price for the old mac will be $70,000 Damon can buy a new machine for a net price of $160,000 (including installa tion costs of $15,000). The new machine will be depreciated under MACRS, using a 5-year recovery period. If the firm acquires the new machine, its working capital needs will change: Accounts receivable will increase $15,000, inventory will increase $19,000, and accounts payable will increase $16,000 Earnings before interest, taxes, depreciation, and amortization (EBITDA) for the old machine are expected to be $95,000 for each of the successive 5 years. For the nevw machine, the expected EBITDA for each of the next 5 years are $105,000, $110,000 $120,000, $120,000, and $120,000, respectively. The corporate tax rate (T) for the firmn is 21%. (Table 4.2 contains the applicable MACRS depreciation percentages.) Damon expects to liquidate the new machine after 5 years for $24,000. The old machine should net $8,000 upon liquidation at the end of the same period, when Damon also expects to recover its net working capital investment. The firm is subject to a tax rate of 21 % TO DO Create a spreadsheet similar to Tables 11.1, 11.5, 11.7, and 11.9 to answer the following: a. Create a spreadsheet to calculate the initial investment. b. Create a spreadsheet to prepare a depreciation schedule for both the new and the old machine. Both machines are depreciated under MACRS, using a 5-year recovery period. Remember that the old machine has only 3 years of depreciation remaining c. Create a spreadsheet to calculate the operating cash flows for Damon Corpora tion for both the new and the old machine. d. Create a spreadsheet to calculate the terminal cash flow associated with the proj c. Repeat all of the calculations above assuming that the new machine qualifies for ect 100% bonus depreciation. nce Visit wooot no