Companies Invest in expansion projects with the expectation of increasing the earnings of its business.

Consider the case of Fox Co:

Fox Co. is considering an investment that will have the following sales, variable costs, and fixed operating costs:

Year 1 Year 2 Year 3 Year 4
Unit sales 3,500 4,000 4,200 4,250
Sales price $38.50 $39.88 $40.15 $41.55
Variable cost per unit $22.34 $22.85 $23.67 $23.87
Fixed operating costs except depreciation $37,000 $37,500 $38,120 $39,560
Accelerated depreciation rate 33% 45% 15% 7%
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. Fox pays a constant tax rate of 40%, and has a weighted average cost of capital (WACC) of 11%.

Determine what the project's net present value (NPV) would be when using accelerated depreciation.

a. $38,789

b. $34,479

c. $49,554

d. $43,099