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Patience is reviewing a project with projected sales of 4,500 units a year, a cash flow of $26 a unit, and a four-year project life. Assume all operating cash flows occur on the last day of each year. The initial cost of the project is $236,000. The relevant discount rate is 12 percent. Patience has the option to abandon the project after two years at which time she feels she could sell the project's assets for $150,000. At what level of annual sales, starting in year 3, should she be willing to abandon this project?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M93052135

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