Margerit 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 percent. Margerit 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

Question

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The Answer of Margerit 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 percent. Margerit 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

Margerit Is Reviewing a Project with Projected Sales of 1,500