'o MINDTAP Maman Alhusennan v Q) a In hunt-W Chapter 12- Part II -- 6 Activity Information '3' 3. Analysisufan expansion project M Aa a Companies...

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:‘o MINDTAP Maman Alhusennan v Q) a In hunt-WChapter 12- Part II -—- ®6 Activity Information '3‘ 3. Analysisufan expansion project M Aa a Companies invest in expansion projecs with the expeciation of increasing the earnings of its business. Consider the case of McFann Co.: McFann Co. is considering an investment that will have the following sales. variable oosts, and fixed operating oosts: Year 1 Year 2 Year 3 Year 4 Unit sales 5,500 5,200 5,700 5,820Sales prioe $42.57 $43.55 $44.76 $46.79Variable oust per unit $22.33 $22.97 $23.45 $23.37Fixed operating costs except depreciation $66,750 $63,950 $69,690 $63,900Accelerated depreciation rate 33% 45% 15% 7% This project will require an investment of $25,000 in new Determine what the project‘s net present value (NW) equipment. The equipment will have no salvage value at would be when using accelerated depreciation. the end of the project‘s four-year life. McFann pays a 0 $65 279 oonstant tax rate of 40%, and it has a weighted average 0 $53,026 oust of capital (WACC) of 11%. Determine what the 0 $87,033 project‘s net present value (NPV) would be when using 0 $72’532 accelerated depreciation.