drop down option 1: $13,756, $15,476, $17,195, $19,774

drop down option 2: $19,480, $16,939, $16,092, $21,174

drop down option 3: accelerated, Straight-line

Companies invest in expansion projects with the expectation of increasing the earnings of its business. Consider the case of Celestial Crane Cosmetics: Celestial Crane Cosmetics is considering an investment that will have the following sales, variable costs, and fixed operating costs: Unit sales (units) Sales price Variable cost per unit Fixed operating costs except depreciation Year 1 3,000 $17.25 $8.88 $12,500 33% Year 2 3,250 $17.33 $8.92 $13,000 45% Year 3 3,300 $17.45 $9.03 $13,220 15% Year 4 3,400 $18.24 $9.06 $13,250 7% Accelerated depreciation rate This project will require an investment of $15,000 in new equipment. The equipment will have no salvage value at the end of the project's four-year life. Celestial Crane Cosmetics pays a constant tax rate of 40%, and it has a required rate of return of 11%. . (Hint: Round each element in your computation- When using accelerated depreciation, the project's net present value (NPV) is _ including the project's net present value-to the nearest whole dollar.) 7. (Hint: Again, round each element in your computation-including the When using straight-line depreciation, the project's NPV is. project's net present value-to the nearest whole dollar.) Using the depreciation method will result in the greater NPV for the project. No other firm would take on this project if Celestial Crane Cosmetics turns it down. How much should Celestial Crane Cosmetics reduce the NPV of this project if it discovered that this project would reduce one of its division's net after-tax cash flows by $300 for each year of the four-year project? $559 $931 $698 O $791 The project will require an initial investment of $15,000, but the project will also be using a company-owned truck that is not currently being used. This truck could be sold for $9,000, after taxes, if the project is rejected. What should Celestial Crane Cosmetics do to take this information into account? Increase the amount of the initial investment by $9,000. Increase the NPV of the project by $9,000. The company does not need to do anything with the value of the truck because the truck is a sunk cost