Same as before, except that the project has the option to contract. 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 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 contracted? What is the flexible project value? What is the value of the option to contract?