Answer: 923 units
Explanation:
Margerit should abandon the project in a year if the cashflow associated with the project brings in a present value of less than or equal to $60,000 in a year.
The present value in year one should be set at $60,000.
The cashflow for the two years at a present value of $60,000 would be:
60,000 = Amount * Present value interest factor of an annuity, 2 periods, 15%
60,000 = Amount * 1.6257
Amount = 60,000 / 1.6257
= $36,907
The above is the amount received per sales that she should abandon the project at.
In units this is:
= 36,907 / 40 per unit
= 923 units
