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

question 10

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.No change in net operating working capital would be required.This is just one of many projects for the firm,so any losses on this project 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:

Generalization

The process of applying the outcome of a specific instance to a broader range of situations without the need for repeated experiments.

Operant Conditioning

An educational method where behavior intensity is adjusted via rewards or penalties.

Generalization

The psychological process in which a response, learned from a specific stimulus, is elicited by similar stimuli, demonstrating the adaptive nature of learning.

Conditioned To Salivate

This term refers to a learned response where an individual or animal begins to salivate in anticipation of food, famously illustrated by Pavlov's experiments with dogs.