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

question 110

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:

Total Quality Management

A management approach focused on continuous improvement, customer satisfaction, and the involvement of all members of an organization in improving processes, products, and services.

Global Indicator

A metric or measure that reflects a significant trend or development on a worldwide scale, often relating to economic, environmental, or social issues.

Evidence-Based Management

The practice of making managerial decisions informed by the best available evidence.

Intellectual Capital

The intangible value of an organization's knowledge, skills, and innovative potential.