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

Question

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The Answer of 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

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