1 We are examining a new project We expect to sell 6,500 units per year at $43 net cash flow each for the next 10 years In other words, the annual operating cash flow is projected to be $43 X 6,500 $279,500 The relevant discount rate is 16 and the initial investment required is $980,000 a What is the base case NPV b After the first year, the project can be dismantled and sold for $810,000 If expected sales are revised based on the first years performance, when would it make sense to abandon the investment In other words, at what level of expected sales would it make sense to abandon the project

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1  We are examining a new project  We expect to sell 6,500 units per year at $43 net cash flow each for the next 10 years  In other words, the annual operating cash flow is projected to be $43 X 6,500   $279,500  The relevant discount rate is 16  and the initial investment required is $980,000  a  What is the base case NPV  b  After the first year, the project can be dismantled and sold for $810,000  If expected sales are revised based on the first years performance, when would it make sense to abandon the investment  In other words, at what level of expected sales would it make sense to abandon the project

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1. We are examining a new project. We expect to sell 6,500 units per year at $43 net cash flow each for the next 10

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