When estimating the incremental cash flows of a project, should be ignored. should be considered and a depreciation, crosion b. sunk costs; synergies changes in net working capital, Interest payments to lenders erosion; synergies e. None of the above C. Consider a four-year project that requires the firm to purchase a feed years. The firm has the choice of using MACRS depreciation les of 39%, 45%, 15% that will be for for 1, 2, 3, and 4, respectively, or the firm could use straight-line depreciation, which would stilings d7% in Your depreciation rate of 25% in all four years. Why might the firm prefer tow MACRS line depreciation? a. Compared to straight line depreciation, using MACRS will decrease taxes in the early years of the project and increase taxes in the later years of the project, and the net effect will be an increase in the project's NPV. Compared to straight line depreciation, using MACRS will increase taxes in the early years of the project and decrease taxes in the later years of the project, and the net effect will be an increase in the project's NPV. Compared to straight line depreciation, using MACRS depreciation will decrease taxes in the early years of the project and decrease taxes in the later years of the project, and the net effect will be an increase in the project's NPV. The firm should be indifferent to using MACRS depreciation versus straight line depreciation because it has no impact on the project's NPV. e. None of the above. Under the base case, a project is expected to have a variable operating cost per unit of $10 and an NP $120 million. A sensitivity analysis has revealed that NPV is $48 million if the variable cost per uni out to be 15% higher than expected. Given this information, you can conclude that a 1% increase in variable operating cost per unit leads to a 120,000,000 15 a. 2% decrease in NPV. b. 40% decrease in NPV. @ 4% decrease in NPV. 60% decrease in NPV. e. None of the above