Your Firm Is Considering a Project with a Four-Year Life

question 355

Multiple Choice

Your firm is considering a project with a four-year life and an initial cost of $87,000. The discount rate for the project is 15 percent. The firm expects to sell 1,800 units a year. The cash flow per unit is $19. The firm will have the option to abandon this project after two years at which time they expect they could sell the project for $40,000. At what level of sales should the firm be willing to abandon this project?

• A) 1,107 units
• B) 1,295 units
• C) 1,361 units
• D) 1,540 units
• E) 1,565 units

---

Definitions:

Lymphocytes

A type of white blood cell vital for the immune system, involved in protecting the body from infections and foreign invaders.

Infection

An infection occurs when harmful microorganisms like bacteria, viruses, fungi, or parasites invade the body, potentially causing illness or disease.

Left Lymphatic Duct

A major lymphatic vessel that drains lymph from the lower body and left side of the upper body into the bloodstream.

Subclavian Vein

A major vein that receives blood from the arm through the axillary vein and runs under the collarbone (clavicle) to return blood to the heart.