We are examining a new project We expect to sell 5,000 units per year at $64 net cash flow apiece for the next 10 years In other words, the annual cash flow is projected to be $64 5,000 $320,000 The relevant discount rate is 13 percent, and the initial investment required is $1,610,000 a What is the base case NPV b After the first year, the project can be dismantled and sold for $1,210,000 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 (Round answer to the nearest whole number)

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Question: We are examining a new project. We expect to sell 5,000 units per year at $64 net cash flow apiece for the next 10 years.

We are examining a new project. We expect to sell 5,000 units per year at $64 net cash flow apiece for the next 10 years. In other words, the annual cash flow is projected to be $64 5,000 = $320,000. The relevant discount rate is 13 percent, and the initial investment required is $1,610,000.

What is the base-case NPV?

b.	After the first year, the project can be dismantled and sold for $1,210,000. 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? (Round answer to the nearest whole number)

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