A company is considering a project involving the outlay of $300,000 which it estimates will generate cash flows over its two year life at the probabilities shown in the following table.

Year 1

Annual cash flow ($)	Probability
100,000	0.25
200,000	0.50
300,000	0.25

Year 2

If cash flows in Year 1 is:	There is probability of:	That the cash flow in Year 2 will be:
100,000	0.25	Nil
	0.50	100,000
	0.25	200,000
200,000	0.25	100,000
	0.50	200,000
	0.25	300,000
300,000	0.25	200,000
	0.50	300,000
	0.25	350,000

Note: All cash flows should be treated as being received at the end of the year.

It has a choice of undertaking this project at either of two sites (A or B) whose costs are identical and are included in the above outlay. In terms of the technology of the project itself, the location will have no effect on the outcome.

If the company chooses site B it has the facility to abandon the project at the end of the first year and to sell the site to an interested purchaser for 150000. This facility is not available at site A.

The company's investment criterion for this type of project is 10% DCF .Its policy would be to abandon the project on site B and to sell the site at the end of year 1 if its expected future cash flows for year 2 were less than the disposal value.

you are required to:

a. calculate the NPV of the project on site A;

b) (i) explain, based on the data given, the specific circumstances in which the company would abandon the project on site B;

(ii) calculate the NPV of the project on site B taking account of the abandonment facility;

c) calculate the finnacial effect of the facility for abandoning the project on site B stating whether it is posiive or negative.

Ignore tax and inflation.