A company is evaluating a project using net present value and internal rate of return (IRR). Information about the project proposal is shown here. Initial investment $250,000 Annual operating cost savings $70,000 Estimated useful life 6 years The project is depreciated using the straight-line method with no salvage value. The company's cost of capital is 10% and the effective income tax rate is 30%. If the effective income tax rate increases to 40%, the company should: *Source: Retired ICMA CMA Exam Questions. reject the project since IRR decreases. reject the project since the annual after-tax cash flows are reduced. accept the project since the depreciation deduction after taxes increases. accept the project since the after-tax discounted cash inflows exceed the cash outflows