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A company is reviewing a project with projected sales of 2,060 units a year, a cash flow of $55 a unit, and a three-year project
A company is reviewing a project with projected sales of 2,060 units a year, a cash flow of $55 a unit, and a three-year project life. The initial cost of the project is $127,150. The relevant discount rate is 16.46%. The company has the option to abandon the project after one year at which time the project can be sold for $71,300. Only at the end of the first year of operation, the company will get to find out the actual level of annual sales for all three years. What is the highest level of sales (in units) below which the company should be willing to abandon the project at the end of year 1? 813 833 854 874 894 25
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