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4. Ergonomic Advantage manufactures office furniture. The firm is interested in ergonomic products that are designed to be easier on the bodies of office workers'
4. Ergonomic Advantage manufactures office furniture. The firm is interested in "ergonomic products that are designed to be easier on the bodies of office workers' who suffer from aliments such as back and neck pain due to sitting for long periods. Unfortunately customer acceptance of ergonomic furniture tends to unpredictable, so a wide range of market response is possible. Management has made the following two-year, probabilistic estimate of the cash flows associated with the project arranged decision tree format (S000). Assuming Ergonomic Advantage has an abandonment option at the end of the first year under which it will recover $7 million of the initial investment in year 2. Ergonomic Advantage has a cost of capital of 15%
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