If you are a financial analyst and is examining a new project. The project is expected to sell 5,900 units per year at $70 net cash flow a piece for the next 10 years. In other words, the annual operating cash flow is projected to be $70 × 5,900 = $413,000. The relevant discount rate is 16 percent, and the initial investment required is $1,700,000. After the first year, the project can be dismantled and sold for $1,530,000. If expected sales are revised based on the first year’s performance, below what level of expected sales would it make sense to abandon the project?A. 3,520 B. 3,550 C. 3,718 D. 3,330
This question was answered on: May 23, 2022
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