What is the base-case npv

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We are examining a new project. We expect to sell 8,750 units per year at $189 net cash flow apiece (including CCA) for the next 16 years. In other words, the annual operating cash flow is projected to be $189 × 8,750 = $1,653,750. The relevant discount rate is 14%, and the initial investment required is $5,500,000.

a. What is the base-case NPV? (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.)

Base-case NPV $

b. After the first year, the project can be dismantled and sold for $2,800,000. If expected sales are revised based on the first year's performance, at what level of expected sales would it make sense to abandon the project? (Do not round intermediate calculations. Round the final answer to the nearest whole unit.)

Expected sales < units

c. Not available in Connect.

Reference no: EM133118889

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