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?
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