Brewsters is considering a project with a 5-year life and


Question: Brewster's is considering a project with a 5-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 at a cash flow per unit of $20. The firm will have the option to abandon this project after three years at which time it could sell the project for $50,000. At what level of sales should the firm be willing to abandon this project at the end of the third year?

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Finance Basics: Brewsters is considering a project with a 5-year life and
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