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

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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? 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


Definitions:

Carboxylic Acids

Organic compounds characterized by the presence of at least one carboxyl group, which consists of a carbon atom double-bonded to an oxygen atom and single-bonded to a hydroxyl group.

Nitroglycerin

A highly explosive liquid used medically as a vasodilator to treat heart conditions and industrially in the manufacture of explosives.

Commercial Explosive

Materials or chemicals used in the construction and mining industries, among others, to demolish or move materials through controlled explosions.

Dynamite

An explosive made of nitroglycerin, sorbents (like silica), and stabilizers, invented by Alfred Nobel and used in mining and construction.

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