Which statement on incremental earnings is correct? a. Incremental earnings are the total earnings resulting from a project. b. Unused office space should still be considered as opportunity costs when calculating the incremental earnings. c. Externalities that do not influence the earnings of a company but do influence third parties, such as free software, should still be included when calculating the incremental earnings. d. Sunk costs represent costs we already made and should therefore be included in the incremental earnings calculations, Assume the following investment opportunity. The company has constant leverage (debt to assets) of 50%, the cost of equity is 20%, and the cost of debt is 7.5%. The corporate tax rate is 25%. Investment takes place today, that is at year 0, and equals 30. Projections of the opportunity are in the table below. The firm needs to use employees from HQ, which currently had no other project, and earn a yearly salary of 1.5 in total Year 1 N 3 4 5 EBIT 11 13 15 17 19 Interests 0.5 0.5 1 1 1.5 Depreciation 2.6 2.6 2.6 2.6 2.6 What are the free cash flows for year 4? a. 15.35 b.10.15 c. 13.85 d. 8.15