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

question 18

Multiple Choice

Isabelle is reviewing a project with projected sales of 1,500 units a year,a cash flow of $38 a unit,and a project life of 4 years.The initial cost of the project is $87,000.The relevant discount rate is 12 percent.She has the option to abandon the project after 1 year at which time she feels she could sell the project for $50,000.At what level of sales should she be willing to abandon the project?

• A)713 units
• B)483 units
• C)967 units
• D)548 units
• E)607 units

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Definitions:

Arouses Us

Incites feelings, often of interest or excitement, in a group or individual.

Informational Social Influence

The change in opinions or behavior that occurs when an individual conforms to what they believe is the correct way to act, based on information from others.

Normative Social Influence

The influence of other people that leads us to conform in order to be liked and accepted by them.

Group

A collection of individuals who interact with each other, usually sharing common goals or interests.