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

question 25

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.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.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 inflation adjustment is required.What is the difference in the expected NPV if the inflation adjustment is made versus if it is not made?

• A)$12,018
• B)$12,650
• C)$13,316
• D)$13,982
• E)$14,681

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Obligations of an individual or entity to act in the best interest of another party, especially when managing their assets.

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A belief in equal rights, duties, and opportunities for all individuals in a society, regardless of their background or economic status.

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Financial gains obtained through work, investment, or other means of income generation.

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