Companies invest in expansion projects with the expectation of increasing the earnings of its business. Consider the case of OakStream Farms Co.: OakStream Farms 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 4,800 5,100 5,000 5,120 Sales price $22.33 $23.45 $23.85 $24.45 Variable cost per unit $9.45 $10.85 $11.95 $12.00 Fixed operating costs $32,500 $33,450 $34,950 $34,875 This project will require an investment of $20,000 in new equipment. Under the new tax law, the equipment is eligible for 100% bonus deprecation at t = 0, so it will be fully depreciated at the time of purchase. The equipment will have no salvage value at the end of the project’s four-year life. OakStream pays a constant tax rate of 25%, and it has a weighted average cost of capital (WACC) of 11%. Determine what the project’s net present value (NPV) would be under the new tax law. Which of the following most closely approximates what the project’s net present value (NPV) would be under the new tax law? Question Blank 1 of 5 choose your answer... Which of the of the following most closely approximates what the project’s NPV would be when using straight-line depreciation? Question Blank 2 of 5 choose your answer... Using the Question Blank 3 of 5 choose your answer... depreciation method will result in the highest NPV for the project. No other firm would take on this project if OakStream turns it down. Which of the following most closely approximates how much OakStream should reduce the NPV of this project, assuming it is discovered that this project would reduce one of its division’s net after-tax cash flows by $500 for each year of the four-year project? Question Blank 4 of 5 choose your answer... OakStream spent $2,500 on a marketing study to estimate the number of units that it can sell each year. What should OakStream do to take this information into account? Question Blank 5 of 5 choose your answer...