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QUESTION

If you are a financial analyst and is examining a new project. the project is expected to sell 5,900 units per year at $73 net cash flow apiece for the next 10 years. in other words, the annual operat

If you are a financial analyst and is examining a new project. the project is expected to sell 5,900 units per year at $73 net cash flow apiece for the next 10 years. in other words, the annual operating cash flow is projected to be $73 × 5,900 = $430,700. 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?

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