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Patience Is Reviewing a Project with Projected Sales of 4,200

Question 87

Multiple Choice

Patience is reviewing a project with projected sales of 4,200 units a year,a cash flow of $28 a unit,and a four-year project life.Assume all operating cash flows occur on the last day of each year.The initial cost of the project is $247,000.The relevant discount rate is 13 percent.Patience has the option to abandon the project after two years at which time she feels she could sell the project's assets for $110,000.At what level of annual sales,starting in year 3,should she be willing to abandon this project?


A) 2,119 units
B) 2,355 units
C) 2,367 units
D) 2,516 units
E) 2,667 units

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