Brewster's Is Considering a Project with a Life of 5

question 60

Multiple Choice

Brewster's is considering a project with a life of 5 years 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 at a net cash flow per unit of $20.The firm will have the option to abandon this project after three years at which time it could sell the project for $50,000.The firm is interested in knowing how the project will perform if the sales forecasts for Years 4 and 5 of the project are revised such that there is a 50 percent chance the sales will be either 1,400 or 2,500 units a year.What is the net present value of this project given these revised sales forecasts?

• A)$23,617
• B)$23,719
• C)$25,002
• D)$26,877
• E)$28,745

---

Definitions:

Matter of Choice

A situation or issue that is determined by personal preference or decision.

Socialist Feminism

A feminist movement that connects the struggle against gender inequality with the critique of capitalism, advocating for social and economic change to empower women.

Radical Feminism

A perspective within feminism that calls for a drastic reordering of society to eliminate male supremacy in all social and economic contexts.

Earnings Gap

The disparity in income between different groups of people, often highlighted between genders, races, or education levels.