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Ruzzo's Is Considering a Project with a 5-Year Life and an Initial

Question 67

Multiple Choice

Ruzzo's is considering a project with a 5-year life and an initial cost of $120,000.The discount rate for the project is 12 percent.The firm expects to sell 2,100 units a year.The cash flow per unit is $20.The firm will have the option to abandon this project after three years at which time it expects it could sell the project for $45,000.At what level of sales should the firm be willing to abandon this project?


A) 1,087.15 units
B) 1,331.32 units
C) 1,479.92 units
D) 1,618.87 units
E) 2,500.00 units

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