Question 1

Brewster's is considering a project with a life of 6 years, an initial cost of $122,000, and a discount rate of 13 percent. The firm expects to sell 2,050 units a year at a cash flow per unit of $22. The firm will have the option to abandon this project after 4 years at which time it could sell the project for $52,500. At what level of sales should the firm be willing to abandon this project at the end of year 4?

Level of sales to abandon = _ units

* don't round steps

Question 2

The firm is interested in knowing how the project will perform if the sales forecasts for Years 5 and 6 of the project are revised such that there is a 55 percent chance the unit sales will be 1,350, otherwise they expect to sell 2,450 units per year. What is the net present value of this project given these revised sales forecasts?

NPV=

* don't round steps