Question: The initial cost of developing a project in year 0 is $100,000. You expect to sell 3,000 units per year over the next 5 years
The initial cost of developing a project in year 0 is $100,000. You expect to sell 3,000 units per year over the next 5 years (years 1 to 5) at a profit of $10 per unit. Given an interest rate of 7%, what is the NPV of this project? How many units would you have to sell to break even in terms of NPV? If we assumed that you sold 3,000 units per year, what profit per unit would break even in terms of NPV?'
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