BUBBA has provided you with the following information:

Full price of machine is $$140,000.$

The increase in net working capital is $$2,000.$

BUBBA has a $25\%$ marginal tax rate.

The machine falls into the MACRS $3-$year class $(33\%,45\%,15\%,$ and $7\%$ depreciation rates$).$

BUBBA will use the machine for $4$ years and then plans to sell it for $$25,000$ at the end of year $4.$

The machine is expected to provide incremental revenue of $$60,000$ per year and incremental cost of $$15,000$ per year for the life of the machine. There will be no transportation costs related to the machine.

BUBBA has a WACC of $10\%.$

Create a MS$-$Excel spreadsheet to calculate the NPV similar to the Cash Flow Estimation spreadsheet $(80$ points$).$ This sheet should not include cash flows in year $5$ since the asset is sold at the end of year $4.$ The spreadsheet will be used by the BUBBA managers to assist them in making the investment decision. The spreadsheet should be set up to allow for a sensitivity analysis to be conducted. The cells to input the full price, increase in net working capital, incremental revenues and costs, sale price in year $4$ and WACC should be easily identified $($e$.$g$.$ yellow$)$ and allow the BUBBA managers to change their values. Your sheet should be set up so that if the assumptions change your sheet updates appropriately. Your sheet should be set up so that if the assumptions change your sheet updates appropriately.

On a separate sheet in the same file, explain whether or not you would recommend purchase of the new machine