We are examining a new project We expect to sell 6,700 units per year at $61 net cash flow apiece for the next 10 years In other words, the annual operating cash flow is projected to be $61 6,700 $408,700 The relevant discount rate is 15 percent, and the initial investment required is $1,780,000 (Do not round intermediate calculations ) a What is the base case NPV (Round your answer to 2 decimal places (e g , 32 16)) NPV $ b After the first year, the project can be dismantled and sold for $1,650,000 If expected sales are revised based on the first years performance, below what level of expected sales would it make sense to abandon the project

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Question: We are examining a new project. We expect to sell 6,700 units per year at $61 net cash flow apiece for the next 10 years.

We are examining a new project. We expect to sell 6,700 units per year at $61 net cash flow apiece for the next 10 years. In other words, the annual operating cash flow is projected to be $61 6,700 = $408,700. The relevant discount rate is 15 percent, and the initial investment required is $1,780,000. (Do not round intermediate calculations.)

a.	What is the base-case NPV? (Round your answer to 2 decimal places. (e.g., 32.16))

NPV

b.	After the first year, the project can be dismantled and sold for $1,650,000. If expected sales are revised based on the first years performance, below what level of expected sales would it make sense to abandon the project?

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