7. Inflation in project analysis It is often easy to overlook the impact of inflation on the net present value of the project. Not incorporating the impact of inflation in determining the value of the cash flows of the project can result in erroneous estimations. Consider the following scenario: Extensive Enterprise Inc. is considering opening a new division to make /Widgets that it expects to sell at a price of $15,250 each in the first year of the project. The company expects the cost of pfoducing each widget to be $6,200 in the first year, however, it expects the telling price and cost per Widget to increase by 19 each year, Based on this information, complete the following table Cost per unit in yea4 company does not take inflation into account when analyzing a project, the expected net present value (NPV) of the project will typically be than the true NPV of the project