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

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Definitions:

Uniqueness

The quality or state of being one of a kind or unlike anything else.

Social Rejection

The experience of being deliberately excluded or ostracized by individuals or groups within a social context.

Hurt My Feelings

An expression indicating that someone's actions or words have caused emotional pain or distress.

Relationship Care

The actions and attitudes involved in maintaining and enhancing the health and satisfaction of a relationship, emphasizing mutual respect, communication, and support.