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Fox Co. is considering an investment that will have the following sales, variable costs, and fixed operating costs Year 2 Year 3 Year 4 Year
Fox Co. is considering an investment that will have the following sales, variable costs, and fixed operating costs Year 2 Year 3 Year 4 Year 1 Unit sales 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 $10,000 in new Determine what the project's net present value (NPV) equipment. The equipment will have no salvage value at would be when using accelerated depreciation the end of the project's four-year life. Fox pays a O $18,503 constant tax rate of 40%, and it has a weighted average $16,447 O cost of capital (WACC) of 11%. Determine what the O $24,671 project's net present value (NPV) would be when using O $20,559 accelerated depreciation. Now determine what the project's NPV would be when using straight-line depreciation
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