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

question 62

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:

Osmosis

The movement of water molecules through a semi-permeable membrane from a region of low solute concentration to a region of high solute concentration.

Active Transport

The movement of molecules across a cell membrane against their concentration gradient, requiring energy.

Electrocardiogram (ECG)

A test that records the electrical activity of the heart over a period of time and is used to detect heart problems and monitor the heart's status in many situations.

T Waves

Components of an EKG reflecting the repolarization of the ventricles in the heart; abnormalities may indicate heart issues.