Desai Industries Is Analyzing an Average-Risk Project, and the Following

question 18

Multiple Choice

Desai Industries is analyzing an average-risk project, and the following data have been developed.Unit sales will be constant, but the sales price should increase with inflation.Fixed costs will also be constant, but variable costs should rise with inflation.The project should last for 3 years, it will be depreciated on a straight-line basis, and there will be no salvage value.This is just one of many projects for the firm, so any losses can be used to offset gains on other firm projects.What is the project's expected NPV?

• A)$15,925
• B)$16,764
• C)$17,646
• D)$18,528
• E)$19,455

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Definitions:

Production Costs

The total expense incurred in manufacturing a product or providing a service, including raw materials, labor, and overhead costs.

Need For Workers

The demand for labor or employees by businesses and industries to perform tasks and produce goods and services.

Productivity Of Labor

A measure of economic performance that calculates the output of goods and services produced per unit of labor input.

Human Capital

The combined abilities, expertise, or other non-physical resources that individuals possess, which can generate economic benefits for the individuals themselves, their employers, or the society.