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We are examining a new project. We expect to sell 7,400 units per year at $59 net cash flow apiece for the next 10 years.

image text in transcribed We are examining a new project. We expect to sell 7,400 units per year at $59 net cash flow apiece for the next 10 years. In other words, the annual operating cash flow is projected to be $597,400=$436,600. The relevant discount rate is 14 percent and the initial investment required is $1.9 million. a. What is the base-case NPV? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89.) b. After the first year, the project can be dismantled and sold for $1.1 million. If expected sales are revised based on the first year's performance, at what level of expected sales would it make sense to abandon the project? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to the nearest whole number, e.g., 1,234,567.)

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