Brewster is considering a project with a life of 5 years, an initial cost of...
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Brewster is considering a project with a life of 5 years, an initial cost of RM600,000, and a discount rate of 12 percent. The firm expects to sell 2,100 units a year at a cash flow per unit of RM100. The firm will have the option to abandon this project after three years at which time it could sell the project for RM250,000. At what level of sales (in years 4 and 5) should the firm be willing to abandon this project at the end of the third year?
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