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THE FOLLOWING QUESTION HAS MULTIPLE PARTS. Oswego Industries is considering investing in a new project and has prepared the incremental earnings forecast and other information

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THE FOLLOWING QUESTION HAS MULTIPLE PARTS. Oswego Industries is considering investing in a new project and has prepared the incremental earnings forecast and other information provided below: Year o Revenue Cost of Goods Sold Year 1 $850,000 -325,000 Year 2 $850,000 - 325,000 Year 3 S850,000 - 325,000 Gross Profit Selling, General, & Admin (SG&A) Depreciation EBIT 525.000 - 110,000 - 180,000 525,000 - 110,000 - 180,000 525,000 - 110,000 - 180.000 235,000 235,000 235,000 Question A: If Oswego Industries uses a cost of capital of 11%, what is the NPV of this project? O A. $558,950 OB. $904,512 OC. $357,576 OD. $349,512 Question B: If Oswego Industries, instead of using straight-line depreciation, uses an accelerated depreciation methodology when evaluating potential investments, what will be the effect on the calculated NPV of the project described above? O A. If an accelerated depreciation methodology is used the calculated NPV would be UNCHANGED. B. If an accelerated depreciation methodology is used, the calculated NPV would DECREASE. OC. If an accelerated depreciation methodology is used, the calculated NPV would INCREASE

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