Keep the Highest: /4 Attempts: 2. Analysis of an expansion project Aa Aa Companies invest in expansion projects with the expectation of increasing the earnings of its business. Consider the case of Garida Co.: Garida Co. is considering an investment that will have the following sales, variable costs, and fixed operating costs: Year 2 Year 3 Year 1 Year 4 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 45% 33% 15% 7% This project will require an investment of $20,000 in new Determine what the project's net present value (NPV) would be when using accelerated depreciation equipment. The equipment will have no salvage value at the end of the project's four-year life. Garida pays a $16,598 constant tax rate of 40%, and it has a weighted average $13,832 cost of capital (WACC) of 11%. Determine what the $12,449 project's net present value (NPV) would be when using $11,066 accelerated depreciation Now determine what the project's NPV would be when using straight-line depreciation depreciation method will result in the highest NPV for the project accelerated Using the accelerated straight-line 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 $300 for each year of the four-year project? $559 $931 $698 $1,024