Dumpe Industries is analyzing an average-risk project, and the following data have been developed. Unit sales will be constant, but the sales price will increase with inflation. Fixed costs will also be constant, but variable costs will rise with inflation. The project should last for 3 years, and there will be no salvage value. This is just one project for the firm, so any losses can be used to offset gains on other firm projects. What is the project's expected NPV? (Note: the constant annual capital cost deduction rate facilitates the calculations.)
A) $8,536
B) $8,985
C) $9,458
D) $9,931

Question

Dumpe Industries is analyzing an average-risk project, and the following data have been developed. Unit sales will be constant, but the sales price will increase with inflation. Fixed costs will also be constant, but variable costs will rise with inflation. The project should last for 3 years, and there will be no salvage value. This is just one project for the firm, so any losses can be used to offset gains on other firm projects. What is the project's expected NPV? (Note: the constant annual capital cost deduction rate facilitates the calculations.) 
A) $8,536 
B) $8,985 
C) $9,458 
D) $9,931

Quizplus · Accepted Answer

The Answer of Dumpe Industries is analyzing an average-risk project, and the following data have been developed. Unit sales will be constant, but the sales price will increase with inflation. Fixed costs will also be constant, but variable costs will rise with inflation. The project should last for 3 years, and there will be no salvage value. This is just one project for the firm, so any losses can be used to offset gains on other firm projects. What is the project's expected NPV? (Note: the constant annual capital cost deduction rate facilitates the calculations.) 
A) $8,536 
B) $8,985 
C) $9,458 
D) $9,931

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