6. Analysis of an expansion project Companies invest in expansion projects with the expectation of increasing the earnings of its business. Consider the case of Happy Dog Soap Happy Dog Soap is considering an investment that will have the following seles, variable costs, and fixed operating costs: Year 2 5.100 $23.45 Year 3 5,000 Year 4 5,120 $24.45 Year 1 Unit sales (units) 4,800 Sales price $22.33 Variable cost per unit 59.45 Fixed operating costs except depreciation $32,500 Accelerated depreciation rate 33 $23.85 $11.95 $10.85 $12.00 $34,950 $33,450 45% $34,875 79 159 This project will require an investment of $20,000 in new equipment. The equipment will have no salvage volue at the end of the project's four year life. Happy Dog Soap pays a constant tax rate of 40%, and it has a required rate of return of 11% (Hint Round each element in your computation- When using accelerated depreciation, the project's net present value (NPV) including the project's not present value to the nearest whole dollar) (Hint: Again, round each element in your computation including the When using straight-line depreciation, the project's NPV projects net present value to the nearest whole dollar) depreciation method will result in the greater NPV for the project