Brewster's is considering a project with a life of 7 years, an initial cost of...
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Brewster's is considering a project with a life of 7 years, an initial cost of $132,000, and a discount rate of 12 percent. The firm expects to sell 1,800 units a year at a cash flow per unit of $32. The firm will have the option to abandon this project after 5 years at which time it could sell the project for $65,000. At what level of sales should the firm be willing to abandon this project at the end of year 5? Don't round steps. 2 decimal answer.
Level of sales to abandon = _units
The firm is interested in knowing how the project will perform if the sales forecasts for Years 6 and 7 of the project are revised such that there is a 30 percent chance the unit sales will be 1,200, otherwise they expect to sell 2,150 units per year. What is the net present value of this project given these revised sales forecasts? Don't round steps. 2 decimal answer.
NPV=
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