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Management Studies

Your firm is considering a project with a five-year life 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. The cash flow per unit is $20. The firm will have the option to abandon this project after three years at which time they expect they could sell the project for $50,000. You are interested in knowing how the project will perform if the sales forecast for years four and five of the project are revised such that there is a 50/50 chance that the sales will be either 1,400 or 2,500 units a year. What is the net present value of this project given your sales forecasts?

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Business Management, Management Studies

Category:- Business Management
Reference No.:- M9109245

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