Margerit is reviewing a project with projected sales of 1,500 units a year, a cash flow

of $40 a unit and a three-year project life. The initial cost of the project is $95,000. The relevant discount rate is 15 percent. Margerit has the option to abandon the project

after one year at which time she feels she could sell the project for $60,000. At what

level of sales should she be willing to abandon the project?

of $40 a unit and a three-year project life. The initial cost of the project is $95,000. The relevant discount rate is 15 percent. Margerit has the option to abandon the project

after one year at which time she feels she could sell the project for $60,000. At what

level of sales should she be willing to abandon the project?

## This question was asked on Apr 12, 2010.

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