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We are examining a new project. We expect to sell 6,000 units per year at $74 net cash flow apiece for the next 10 years.

We are examining a new project. We expect to sell 6,000 units per year at $74 net cash flow apiece for the next 10 years. In other words, the annual operating cash flow is projected to be $74 6,000 = $444,000. The relevant discount rate is 18 percent, and the initial investment required is $1,710,000. a. What is the base-case NPV? b. After the first year, the project can be dismantled and sold for $1,540,000. If expected sales are revised based on the first years performance, below what level of expected sales would it make sense to abandon the project in units?

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