Your Firm Is Considering a Project with a Five-Year Life

question 64

Multiple Choice

Your firm is considering a project with a five-year life and an initial cost of $120,000.The discount rate for the project is 12 percent.The firm expects to sell 2,100 units a year.The cash flow per unit is $20.The firm will have the option to abandon this project after three years at which time it expects it could sell the project for $45,000.At what level of sales should the firm be willing to abandon this project?

• A)420 units
• B)1,332 units
• C)1,479 units
• D)1,618 units
• E)2,500 units

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Definitions:

Looking-glass Self

A social psychological concept suggesting that people form their self-image based on how they believe others perceive them.

Self-awareness

The conscious knowledge of one’s own character, feelings, motives, and desires.

Low Self-esteem

Low self-esteem is characterized by a lack of confidence and feeling unworthy, which can negatively impact various aspects of life, including relationships and mental health.

Compensating

The use of a strength to make up for a real or perceived weakness.