Business, 05.05.2020 04:38 iiCaxx4668

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 5,500 5,200 5,700 5,820
Sales price $42.57 $43.55 $44.76 $46.79
Variable cost per unit $22.83 $22.97 $23.45 $23.87
Fixed operating costs except depreciation $66,750 $68,950 $69,690 $68,900
Accelerated depreciation rate 33% 45% 15% 7%

This project will require an investment of $10,000 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.

a. $82,622
b. $74,360
c. $66,098
d. $95,015

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