A project requires an initial investment of $150,000 and has an expected life of five years. The required rate of return on the project is 12 per cent per annum.

The project’s estimated cash flows each year are as follows:

The selling price, costs and activity levels are expected to remain the same for each year of the project.
Ignore taxation and inflation.
Required:
Calculate the percentage change in the selling price that would result in the project being rejected.

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Sales revenue Variable costs Incremental fixed costs ($000) 101 30 5