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:

Planning

The process of defining an organization’s goals, establishing strategies for achieving those goals, and developing plans to integrate and coordinate activities.

Flexibility

The ability to adapt to new, different, or changing requirements and situations.

Orientation

The introduction process for new employees or members to familiarize them with the organization's operations, culture, and policies.

Time Management

The process of organizing and planning how to divide your time between specific activities to increase efficiency or productivity.