Eli and Co. is considering a new project which would require a new equipment that would cost them $100,000. The project is expected to last for four years and generate an EBIT (1-1) (i.e., NOPAT) of $75,000 each year. Under MACR, the applicable depreciation rates are 33%, 45%,15%, and 7% for year 1,2,3 and 4, respectively. The equipment purchased for the project would not have a salvage value at the end of the project and the project does not require any additional investment in working capital. The applicable tax rate is 25% and the WACC of the company is 7.5%. Question 7 A financial analyst at Eli and Co. discovers that this new project has a cannibalization effect. She estimates that the new project would reduce one of its divisions net after-tax cash flows by $5,000 for each year of the project. By how much would this cannibalization effect reduce the NPV of the new project? O $5,000.00 $16,746.63 O $20,000.00 $4,651.16