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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) 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 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

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