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

question 57

Multiple Choice

Poulsen 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. 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?

• A) $13,286
• B) $13,985
• C) $14,721
• D) $15,457
• E) $16,230

---

Definitions:

Combination Scheduling

A method in operations management of integrating multiple tasks or operations schedules into a cohesive plan.

Time-specified Scheduling

A method of appointment scheduling in healthcare where each patient is allocated a specific time slot.

Prenatal Examination

A medical check-up for a pregnant woman to monitor the health of her and the fetus, typically including tests and scans.

New Patient

An individual who is receiving medical treatment from a physician or healthcare facility for the first time, or after a significant lapse in care or services from the provider.