**Please use Excel when answering this problem.**

5. You are considering the following investment: (8 points) B 0 D E F G H 1 2 3 4 5 6 7 3,000 3,000 3,000 2,500 2,500 2,500 2,500 4 A 3 Year 4 Earnings before depreciation and taxes 5 Depreciation 6 Eamings before taxes 7 Tax (34%) 8 Net operating profit after tax 9 Capital investment (no salvage value) -10,500 10 Add back depreciation 11 Free cash flow 12 13 Discount rate 14 NPV 0 a. Assuming that the investment can be depreciated using 7-year straight-line depreciation with no salvage value, calculate the project NPV. b. What will be the company's gain in present value if it uses a 7-year modified accelerated depreciation (MACRS) schedule, given below: A 17 Year 18 MACRS depreciation B 0 C D E F G 1 2 3 4 5 14.29% 24.49% 17.49% 12.49% 8.93% H 1 J 6 7 8 8.93% 8.93% 4.45% TO