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3. Analysis Of an expansion project Companies invest in expansion projects with the expectation of increasing the earnings of its business. Consider the case of Falcon Freight: Falcon Freight is considering an investment that will have the following sales, variable costs, and fixed operating costs: Year 1 Year 2 Year 3 Year 4 Unit sales (units) 3,500 4,000 4,200 4,250 Sales price $38.50 $39.88 $40.15 $41.55 Variable cost per unit $22.34 $22.85 $23.67 $23.87 Fixed operating costs except depreciation $37,000 $37,500 $38,120 $39,560 Accelerated depreciation rate 33% 45% 15% 7% 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. Falcon Freight pays a constant tax rate of 40%, and it has a required rate of return of 11%. When using accelerated depreciation, the project's net present value (NPV) is v . (Hint: Round each element in your computation including the project's net present valueto the nearest whole dollar.) When using straight-line depreciation, the project's NPV is v . (Hint: Again, round each element in your computationincluding the project's net present valueto the nearest whole dollar.) Using the v depreciation method will result in the greater NPV for the project. No other rm would take on this project if Falcon Freight turns it down. How much should Falcon Freight 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? 0 $1,706 0 $1,551 0 $1,318 0 $1,163 Falcon Freight spent $1,750.00 on a marketing study to estimate the number of units that it can sell each year. What should Falcon Freight do to take this information into account? 0 Increase the NPV of the project $1,750.00. 0 The company does not need to do anything with the cost of the marketing study because the marketing study is a sunk cost. O Increase the amount of the initial investment by $1,750.00