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

question 253

Multiple Choice

Margerit 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 percent. Margerit 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

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Definitions:

Interstate

Relating to or involving the connection or interaction between different states, typically used in the context of highways or commerce in the United States.

Stress

A physical or emotional response to external pressures or demands, often resulting in feelings of tension and strain.

Psychoneuroimmunology

The interdisciplinary study exploring the interactions between the nervous system, psychological processes, and the immune system.

Immune Reaction

The body's defense mechanism in response to foreign substances, involving the activation of white blood cells and the production of antibodies.