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Please answer all parts of the question!! Thanks!! McFann Co. is considering an investment that will have the following sales, variable costs, and fixed operating
Please answer all parts of the question!! Thanks!!
McFann Co. 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 3,000 3,400 3,250 3,300 Sales price $17.33 $17.45 $18.24 $17.25 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) would be when using accelerated depreciation equipment. The equipment will have no salvage value at the end of the project's four-year life. McFann pays a O $20,559 O $23,643 O $24,671 constant tax rate of 40%, and it has a weighted average cost of capital (WACC) of 11%. Determine what the project's net present value (NPV) would be when using O $16,447 accelerated depreciation 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. straight-line accelerated No other firm would take on this project if McFann turns it down. How much should McFann 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? O $1,706 O $931 O $1,163 O $1,551 OOO OStep by Step Solution
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