Marguerite is reviewing a project with projected sales of 1,400 units a year,a cash flow of $39 a unit and project life of 3 years.The initial cost of the project is $94,000 and the discount rate is 14 percent.She has the option to abandon the project after one year at which time she feels she could sell the project for $63,000.At what quantity of annual sales should she be willing to abandon the project after the first year?
A)899 units
B)981 units
C)967 units
D)1,199 units
E)1,006 units

Question

Quizplus · Accepted Answer

The Answer of Marguerite is reviewing a project with projected sales of 1,400 units a year,a cash flow of $39 a unit and project life of 3 years.The initial cost of the project is $94,000 and the discount rate is 14 percent.She has the option to abandon the project after one year at which time she feels she could sell the project for $63,000.At what quantity of annual sales should she be willing to abandon the project after the first year?
A)899 units
B)981 units
C)967 units
D)1,199 units
E)1,006 units

Marguerite Is Reviewing a Project with Projected Sales of 1,400