Poulsen Industries is analyzing an average-risk project, and thefollowing data have been developed. Unit sales will be constant,but the sales price should increase with inflation. Fixed costswill also be constant, but variable costs should rise withinflation. The project should last for 3 years, it will bedepreciated on a straight-line basis, and there will be no salvagevalue. No change in net operating working capital would berequired. This is just one of many projects for the firm, so anylosses on this project can be used to offset gains on other firmprojects. The marketing manager does not think it is necessary toadjust for inflation since both the sales price and the variablecosts will rise at the same rate, but the CFO thinks an inflationadjustment is required. What is the difference in the expected NPVif the inflation adjustment is made versus if it is not made? Donot round the intermediate calculations and round the final answerto the nearest whole number.

WACC	10.0%
Net investment cost (depreciable basis)	$200,000
Units sold	38,000
Average price per unit, Year 1	$25.00
Fixed op. cost excl. depr. (constant)	$150,000
Variable op. cost/unit, Year 1	$20.20
Annual depreciation rate	33.333%
Expected inflation	4.00%
Tax rate	40.0%

a. $10,017

b. $12,908

c. $7,952

d. $10,327

e. $9,707