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Brewsters is considering a project with a 5-year life and an initial cost of $120,000. The discount rate for the project is 12 percent. The
Brewsters is considering a project with a 5-year life and an initial cost of $120,000. The discount rate for the project is 12 percent. The firm expects to sell 2,100 units a year at a cash flow per unit of $20. The firm will have the option to abandon this project after three years at which time it could sell the project for $50,000. At what level of sales should the firm be willing to abandon this project at the end of the third year? Select one: a. 420 units b. 1,041 units c. 1,479 units d. 1,618 units e. 2,500 units
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