1. Analysis of an expanaion project. Companies invest in expanalon projects with the expectation of increasing the darnirgs of its business. Cansider the case of Garida Co. Garida Co. is considering an investment that wit have the following sales, variable costs, and fixed operatsig sosts: This project will requife an investment of 510,000 in new equipment, Under the new tax law, the ecuipmert is elsyible for 100% bohis deprecation at t=0, so it will be filly depreciated at the time of purchase. The equipment will have no salvape value at the end of the oroyects fouf'year life. Gavida pays a constant tax rate of 25%, and it has a weighted average cost of cap( would be under the new tax law. Betermine what the project's net present value (WPV) would be under the new tax law. 531,930 526,608 $21,286 923,947 Now determine what the profect's NPV would be when using stralght-line deprecation. Using the deprecation miethod will resuit in the highest NPY for the project. No other firm would take on this areject if Garida taiens if dovn. How rruch shoud Garida reduce the NoV of ths aroject if it discovered that this project would reduce one of its division's net aftentax cash flows by sson for each year of the four-yelr peoject? Garida spent $1,500 on a marketing study to estimate the number of unies that it can self ench year. What shbuld Garida Go to take this ieformabion inte account? The company does not need to do anything with the cost of the narketing study becaule the marketurg study is a sunk cost. fincrease the NDV of the projoct $1,500. Increase the amount of the initaai investment by $1,500