Allied Products is thinking about a new product launch. The vice president of marketing suggests that Allied Products can sell 2 million units per year at \($100\) net cash flow per unit for the next 10 years. Allied Products uses a 20-percent discount rate for new product launches and the required initial investment is \($100\) million.

a. What is the base case NPV?

b. After the first year, the project can be dismantled and sold for scrap for \($50\) million. If expected cash flows can be revised based on the first year’s experience, when would it make sense to abandon the project?