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Companies invest in expansion projects with the expectation of increasing the earnings of its business Consider the case of Fox Co.: Fox Co. is considering

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Companies invest in expansion projects with the expectation of increasing the earnings of its business Consider the case of Fox Co.: Fox Co. is considering an investment that will sales, variable costs, and foed operating costs: Year 3 Year Unit sales 5,700 5,820 $43.55 $44.76 $46.79 Sales price Variable cost per unit Foxed operating costs except depreciation Accelerated depreciation rate 68,900 SN NIB 28 N90 This project will require an investment of will have no salvage value at the end of the project's four-year life. Fox pays a constant tax rate of 40%, and it has a weighted (WACC) of 11%. Determine what the project's net present value (NPV) would be when using accelerated sing accelerated depreciation. (Note: Round your answer to the nearest whole dollar.) $58,026 $72,532 ,038 565,279 whe straight-line depreciation. (Note: Round your answer to the nearest whole Now determine what the dollar.) $93,737 The depreciation will result in the highest NPV for the po $82,921 No othe t ake on this project if * reduce the NPV of this project if it discovered that this project would bf its division's net after-tax ca project? (Note: Round your answer to the nearest whole d $72,105 down $1,163 O $1,706 how determine what the project's Now would be when uang straight line depreciation. (Note: Round your US Now determine what the project's NPV would be when dollar.) straight-line depreciation. (Note: Round your answer to the nearest whole reciation method will result in the highest NPU for the project. straight-line . take on this project if Fox turns its division's net after-tax cash NPV of this project if it discovered that this project four-year project? (Note: Round your answer to the nearest flows 005$ woull accelerated wholm Now determine what the project's NPV would be when using straight-line depreciation. (Note: Round your answer to the nearest whole dollar.) The depreciation method will result in the highest NPV for the project. No other firm would take on this project if Fox turns it down. How much should Fox reduce the NPV of this project if it discovered that this project would reduce one of its division's net after-tax cash flows by $500 for each year of the four-year project? (Note: Round your answer to the nearest whole dollar.) $1,163 O $1,706 $1,551 $931 Fox spent $1,750 on a marketing study to estimate the number of units that it can sell each year. What should Fox do to take this information into account? The company does not need to do anything with the cost of the marketing study because the marketing study is a sunk cost. Increase the NPV of the project $1,750. Increase the amount of the initial investment by $1,750

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