Problem $24-14$ Abandonment Value $[$LO$5]$

We are examining a new project. We expect to sell $5,300$ units per year at $$67$ net cash

flow apiece for the next $10$ years. In other words, the annual cash flow is projected to be

$$675,300=$$$355,100.$ The relevant discount rate is $16$ percent, and the initial

investment required is $$1,520,000.$

a$.$ What is the base$-$case NPV$?($Do not round intermediate calculations and round

your answer to $2$ decimal places, e$.$g$.,32\mathrm{.}16.)$

b$.$ After the first year, the project can be dismantled and sold for $$1,240,000.$ If expected

sales are revised based on the first year's performance, below what level of expected

sales would it make sense to abandon the project? $($Do not round intermediate

calculations and round your answer to the nearest whole number, e$.$g$.,32.)$