Companies invest in expansion projects with the expectation of increasing the earnings of its business. Consider the following case of Yeatman Co. Yeatman Co. is considering an investment that will have the following sales, variable costs, and fixed operating costs:

Year 1 Year 2 Year 3 Year 4

Unit sales

3,000 3,250 3,300 3,400

Sales Price

$17.25 $17.33 $17.45 $18.24

Variable cost per unit

$8.88 $8.92 $9.03 $9.06

Fixed operating costs except depreciation $12,500 $13,000 $13,220 $13,250 Accelerated depreciation rate

33% 45% 15% 7%

This project will require an investment of $15,000 in new equipment. The equipment will have no salvage value at the end of the projects four-year life. Yeatman pays a constant tax rate of 40%, and it has a weighted average cost of capital (WACC) of 11%. Determine what the projects net present value (NPV) would be when using accelerated depreciation. Determine what the projects net present value (NPV) would be when using accelerated depreciation. A. $19,775 B. $17,196 C. $20,635 D. $15,476