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Cavani is reviewing a project with projected sales of 1,500 units a year, a cash flow of $60 a unit and a six-year project life.
Cavani is reviewing a project with projected sales of 1,500 units a year, a cash flow of $60 a unit and a six-year project life. The initial cost of the project is $125,000. The relevant discount rate is 10 percent. Cavani has the option to abandon the project after one year at which time he feels he could sell the project for $60,000. At what level of sales should he be willing to abandon the project
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