Consider the case of Lumbering Or Truckmakers: Lumbering Ox Truckmakers is considering an investment that will have the following sales, variable costs and fixed operating costs Year 2 5,100 Year 4 5.120 Year 1 4,800 $22.33 $9.45 $32,500 Unit sales (unita) Sales price Variable cost per unit Fixed operating costs except depreciation Accelerated depreciation rate $23.45 $10.85 Year 3 5.000 $23.05 $11.95 $34,950 $24.45 $33,450 $12.00 $34,875 33% 15 74 This project will require an investment of $20,000 in new equipment. The equipment will have no salvage value at the end of the project's four year life. Lumbering Ox Truckmakers pays a constant tax rate of 40%, and it has a required rate of return of 11% When using accelerated depreciation, the project's net present value (NPV) is (Hint: Round each element in your computation- including the project's Dot present value to the nearest whole dollar) when using straight-line depreciation, the project's NPV is (Hint: Again, round each element in your computation including the project's not present value--to the nearest whole dollar) Using the depreciation method will result in the greater NPV for the project. No other form would take on this project if Lumbering ox Truckmakers turns it down. How much should Lumbering Ox Truckmakers reduce the NPV of this project if it discovered that this project would reduce one of its division's net after-tax cash rows by $700 for each year of the four year project? $1,303 D$1,629 $2,389 $2,172 The project will require an initial investment of $20,000, but the project will also be using a company-owned truck that is not currently being used. This truck could be sold for $18,000, after taxes, if the project is rejected. What should Lumbering Ox Truckmakers do to take this information into account? Increase the amount of the initial investment by $18,000. The company does not need to do anything with the value of the truck because the truck is a sunk cost. O Increase the NPV of the project by $18,000