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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 Year

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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 Year 4 3,400 $17.25 $17.33 $17.45$18.24 $8.88 $8.92 $9.03 $9.06 Fixed operating costs except depreciation $12,500 $13,000 $13,220 $13,250 7% Unit sales Sales price Variable cost per unit 3,000 3,250 3,300 Accelerated depreciation rate 33% 45% 15% This project will require an investment of $20,000 n new Determine what the project's net present value (NPV) 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 would be when using accelerated depreciation $15,907 O $16,598 $11,066 O $13,832 Now determine what the project's NPV would be when using straight-line depreciation Using the depreciation method will result in the highest NPV for the project No other firm would take on this project if Fox turns it down. How much should Fox reduce the NPV of this project if it discovered that thi:s project would reduce one of its division's net after-tax cash flows by $400 for each year of the four-year project? O $1,055 O $1,241 O $745 O $931

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