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

question 40

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%) 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:

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