Question #3 answer choices: straight-line / accelerated

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 Sales price Variable cost per unit Fixed operating costs except depreciation 5,500 $42.57 $22.83 $66,750 5,200 $43.55 $22.97 $68,950 5,700 $44.76 $23.45 $69,690 5,820 $46.79 $23.87 $68,900 Accelerated depreciation rate 33% 45% 15% 7% Determine what the project's net present value (NPV) would be when using accelerated depreciation. 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. McFann pays a 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 accelerated depreciation. O $71,333 O $91,148 O $79,259 O $63,407 Now determine what the project's NPV would be when using straight-line depreciation. $102,704 $90,853 $75,053 Using the depreciation method will result in the highest NPV for the pr $79,003 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 $300 for each year of the four-year project? 0000 O $559 O $791 $931 O $698