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Garida Co. is considering an investment that will have the following sales, varilable costs, and fixed operating costs Year 1 Year 2 Yr 3 Year

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Garida Co. is considering an investment that will have the following sales, varilable costs, and fixed operating costs Year 1 Year 2 Yr 3 Year 4 4,200 4,1004,300 4,400 $29.82 $30.00 $30.31 $33.19 $12.15 $13.45 $14.02 $14.55 Fixed operating costs except depreciation $41,000 $41,670 $41,890 40,100 796 Unit sales Sales price Variable cost per unit Accelerated depreciation rate 33% 45% 15% This project will require an investment of $25,000 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. Garida pays a constant tax rate of 40%, and it has a weighted average cost of capital (WACC) of 11%. Determine what the projedt's net present value (NPV) would be when using51.370 accelerated depreciation. o $42,808 o $34,246 O $38,527 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 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 $400 for each year of the four-year project? $1,365 O $745 O $1,241 o $1,055 The project will require an initial investment of $25,000, but the project will also be using a company-owned truck that is not currently being used. This truck could be sold for $12,000, after taxes, if the project is rejected. What should Garida do to take this information into account? The company does not need to do anything with the value of the truck because the truck is a sunk cost. O Increase the NPV of the project by $12,000. O Increase the amount of the initial investment by $12,000

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