Fill IN THE BLANK OPTIONS Provided:

1. Now determine what the projects NPV would be when using straight-line depreciation. (Note: Round your answer to the nearest whole dollar.)

Option1: $37,277

Option2: $39,239

Option3: $45,125

Option4: $51,011

2. The _______ depreciation method will result in the highest NPV for the project.

Option1: Accelerated

Option2: Straight - Line

Garida Co. is considering an investment that will have the following sales, variable costs, and fixed operating costs: Year 2 Year 4 Year 1 Year 3 Unit sales 4,800 5,100 5,000 5,120 Sales price $22.33 $23.45 $23.85 $24.45 Variable cost per unit $9.45 $11.95 $10.85 $12.00 Fixed operating costs except depreciation $32,500 $33,450 $34,950 $34,875 Accelerated depreciation rate 33% 45% 15% 7% 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. Garida pays a constant tax rate of 40%, and it has a weighted average cost of capital (WACC) of 11%. Determine what the project's net present value (NPV) would be when using accelerated depreciation. (Note: Round your answer to the nearest whole dollar.) O $35,623 O $47,497 O $39,581 O $31,665 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 Garida turns it down. How much should Garida 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 $700 for each year of the four-year project? (Note: Round your answer to the nearest whole dollar.) O $1,303 O $2,172 $2,389 O $1,629 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 $4,000, after taxes, if the project is rejected. What should Garida do to take this information into account? Increase the amount of the initial investment by $4,000. O Increase the NPV of the project by $4,000. O The company does not need to do anything with the value of the truck because the truck is a sunk cost