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Falcon Freight is considering an investment that will have the following sales, variable costs, and fixed operating costs: Year 1 Year 2 Year 3 Year

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Falcon Freight 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 (units) 5,500 5,200 5,700 5,820 Sales price $42.57 $43.55 $44.76 $46.79 Variable cost per unit $22.83 $22.97 $23.45 $23.87 Fixed operating costs except depreciation $66,750 $68,950 $69,690 $68,900 Accelerated depreciation rate 33% 45% 15% 7% This project will require an investment of $25,000 in new equipment. The equipment will have no salvage value at the end of the project's four-year life. Falcon Freight 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) is -including the project's net 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 is project's net present value-to the nearest whole dollar.) Using the depreciation method will result in the greater NPV for the project. No other firm would take on this project if Falcon Freight turns it down. How much should Falcon Freight 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 $300 for each year of the four-year project

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