3. Analysis of an expansion project Companies imvest in expansion projects with the expectation of increasing the earnings of its business. Corsider the case of Garida Co:? Garida Co, is considering an investment that wil have the following sales, variable costs, and fixed operating costs: This project will require an investment of $25,000 in new equipment. Under the new tax law, the equipment is eligible for 100% bonus depreca t=0,50 if will be fully depreciated at the time of purchase. The equipment will have no salvage value at the end of the project's four-year life. poys a constant tax rate of 25%, and it has a weighted average cost of capital (WACC) of 11%. Determine what the project's net present value would be under the oew tax law. Determine what the project's net peesent value (NPV) would be under the new tax law. $111,523 $83,642 $74,349 $92,936 Now determine what the project's NPV would be when using straight-line depreciation. depreciation method will result in the highest NPV for the project. No other firm would take on this project if Garida turns it down. How much should Garida reduce the NPV of this project if it discovered that this broject would reduce one of its division's net after-tax cash flows by $700 for each year of the four-year project? $1,629 $2,389 $2,172 $1,303 e project will require an initial investment of $25,000, but the project will also be using a company-owned truck that is not currently being us. is truck could be sold for $12,000, after taxes, if the project is rejected. What should Garida do to take this information into account? No other fim woukd take on this project if Garida turns it down. How much shoudd Garida reduce the NPV of this project if it discovered that this noject would reduce one of its division's net after-tax cash flows by 5700 for each year of the fouricyear project? 51,629 52,389 $2,172 51,303 The project will require an initiai investrment of $25,000, but the project will also be using a company-owned truck that is not currently being usec This truck could be sold for 512,000 , after taxes, if the project is rejected. What showid Garida do to take this information into account? Therease the NPy of the project by $12,000. Increase the amount of the initial investment by $12,000