Happy Dog Soap spent $1,750.00 on a marketing study to estimate the number of units that it can sell each year. What should Happy Dog Soap do to take this information into account?

a. The company does not need to do anything with the cost of the marketing study because the marketing study is a sunk cost.

b. Increase the NPV of the project $1,750.00.

c. Increase the amount of the initial investment by $1,750.00.

Unit sales (units) Sales price Variable cost per unit Fixed operating costs except depreciation Year 1 3,500 $38.50 $22.34 $37,000 33% Year 2 4,000 $39.88 $22.85 $37,500 45% Year 3 4,200 $40.15 $23.67 $38,120 15% Year 4 4,250 $41.55 $23.87 $39,560 7% Accelerated depreciation rate This project will require an investment of $15,000 in new equipment. The equipment will have no salvage value at the end of the project's four-year life. Happy Dog Soap pays a constant tax rate of 40%, and it has a required rate of return of 11%. (Hint: Round each element in your computation- When using accelerated depreciation, the project's net present value (NPV) is including the project's net present value-to the nearest whole dollar.) . (Hint: Again, round each element in your computation including the When using straight-line depreciation, the project's NPV is project's net present value-to the nearest whole dollar.) Using the depreciation method will result in the greater NPV for the project. No other firm would take on this project if Happy Dog Soap turns it down. How much should Happy Dog Soap 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 $500 for each year of the four-year project