Same as before, except that the project has the option to choose among all three alternatives: (1) abandonment, (2) expansion, or (3) contraction.

The static project value now is $146 million, the standard deviation of static project value is 63.0%, the riskfree rate is 0.00%, the project can be abandoned at any time for a salvage value of $95.0 million, the project can be expanded by 75% at any time for an expansion cost of $130.0 million, the project can be contracted by 55% at any time for contraction savings of $75.0 million, the time to project completion is 2.4 years, and an 8 period binomial model will be used.

When should the project be abandoned, expanded, or contracted? What is the flexible project value? What is the value of the option to choose?