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Fox Co. is considering an investment that will have the following sales, variable costs, and fixed operating costs: Year 1 Year 2 Year 3 Unit
Fox Co. is considering an investment that will have the following sales, variable costs, and fixed operating costs: Year 1 Year 2 Year 3 Unit sales Sales price Variable cost per unit Fixed operating costs except depreciation 4,200 $29.82 $12.15 $41,000 4,100 $30.00 $13.45 $41,670 4,300 $30.31 $14.02 $41,890 Year 4 4,400 $33.19 $14.55 $40,100 Accelerated depreciation rate 33% 45% 15% 7% Determine what the project's net present value (NPV) would be when using accelerated depreciation. This project will require an investment of $10,000 in new equipment. The equipment 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 average cost of capital (WACC) of 11%. Determine what the project's net present value (NPV) would be when using accelerated depreciation. $52,898 O $60,833 O $47,608 O$42,318 Now determine what the project's NPV would be when using straight-line depreciation
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