Sylvester Media Is Analyzing an Average-Risk Project, and the Following

question 39

Multiple Choice

Sylvester Media 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.The marketing manager does not think it is necessary to adjust for inflation since both the sales price and the variable costs will rise at the same rate, but the CFO thinks an adjustment is required.What is the difference in the expected NPV if the inflation adjustment is made vs.if it is not made? $\begin{array}{lr}\text { Project cost of capital ( } \mathrm{r} \text { ) } & 10.0 \% \\\text { Net investment cost (depreciable basis) } & \$ 200,000 \\\text { Units sold } & 50,000 \\\text { Average price per unit, Year } 1 & \$ 25.00\\\text { Fixed op cost excl. deprec. (constant) } & \$ 150,000 \\\text { Variable op. cost }{ }^{\prime} \text { unit, Year } 1 & \$ 20.20 \\\text { Annual depreciation rate } & 33.333 \% \\\text { Expected inflation } & 4.00 \% \\\text { Tax rate } & 25.0 \%\end{array}$

• A) $15,330
• B) $16,136
• C) $16,986
• D) $17,835
• E) $18,727

Identify and explain various mnemonic devices and their effectiveness in enhancing memory.

Describe the encoding process and the significance of meaningful encoding in memory.

Recognize the impact of emotions and modifications over time on memory recall.

Explain the concepts of iconic and echoic memories and their durations.

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Definitions:

Normal Good

A good for which demand increases as the income of consumers increases, showing a positive correlation between income and demand.

Pizza

A popular dish of Italian origin consisting of a round, flattened base of leavened wheat-based dough topped with tomatoes, cheese, and often various other ingredients.

Income Elasticity

An indicator that shows the variation in demand for a product based on changes in the income levels of consumers.

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Professional American football matches played by teams that are members of the National Football League (NFL) or other professional football leagues.