5. STJ-MC has just designed a new product that it is considering for commercialization. In order to manufucture the product STJ-MC is considering buying a new asset for $16,000. The asset has an 8 yer life for "book" purposes (Straight-Line-8 years and no salvage value) and for "tax purposes (MACRS-7 year life). The marketing department along with industrial engineering and corporate financial planning and analysis developed the following assumptions: r S $16,000 Year1- Sales Sales Grawth COGS % of Sales 5G&A-% of Sales Product Launch Exp $25,000 a0% 100% 10.0% 10.0% s.0% 5.0% 0.0% 65.0% 20,0% 1,750$ 35,0% 65.0% 20.0% 64.0% 20,0% 64.0% 20,0% 640% 20,0% 630% 19.0% 630% 18.0% 65.0% 20.0% 1,750 1,000 35,0% 350% 350% 35.0% 35.0% 35.0% 35.0% A. Develop the ongoing annual EBITDA (eamings before interest, tax, depreciation, and amortization) for all 8-years using the noted assumptions. Part A does not include depreciation. r 7 Gross Income SG&A Product Launch Part A Depreciation- Straight Line EBIT-Operaring Income Taxes Part B NOPAT Depreclation Operating Cash Floww NPV @ 10% B. Use straight-line depreciation to calculate the depreciation, the resulting Operating Income, Taxes, NOPAT, and Operating Cash Flow as well as the Net Present Value. C. Repeat this analysis using the 7-year MACRS tax depreciation rate instend of straight-line: MACRS Life (years) 14.29% 24.48% 17.49% 12 49% &93% &93% 8,93% 4.45% Start with EBITDA for all 8 years and then substitute MACRS depreciation instead of Straight- D. Reduce the tax rate to 21% for all 8 years using MACRS, Calculatet erevis dann al cash