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Marguerite is reviewing a project with projected sales of 1,500 units a year, a cash flow of $40 a unit and a three-year project life.
Marguerite is reviewing a project with projected sales of 1,500 units a year, a cash flow of $40 a unit and a three-year project life. The initial cost of the project is $95,000. The relevant discount rate is 15%. Marguerite has the option to abandon the project after one year at which time she feels she could sell the project for $60,000. At what level of sales should she be willing to abandon the project? A. 899 units B. 923 units C. 967 units D. 1,199 units E. 1,206 units
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