Considering a project with a five-year life and initial cost

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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%. 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 it expects it could sell the project for $50,000. At what level of sales should the firm be willing to abandon this project?

A. 420 units

B. 1,041 units

C. 1,479 units

D. 1,618 units

E. 2,500 units

Reference no: EM13729797

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