a General Lighting currently supplies headlamps to a large segment of the automobile industry. Managers are contemplating a facility upgrade. This requires an up front investment of $600 million. The project's opportunity cost of capital is 18%, and the yield on U.S. Treasury securities is 5%. Management's estimates of the cash flows and probabilities for different decisions at different points in time is summarized by a tree diagram. General Lighting, Inc. Project (Millions of Dollars) -$600 t=0 t=1 Low Demand 40 130 High Demand 400 .70 t=2 Low 240 175 High 990 25 Low 295 20 High 1030 .80 What is the NPV of the facility upgrade $183,47 million @ $253.08 million D 167 56 million $201.74 million Continued from Question above, if General Lighting has the opportunity to abandon the project by selling the plant for $420 million at the first period, what is the revised NPV then? $236.07 million $198.15 million $179.31 million $265.42 million Question 27 (3.33 points) Continued from the above two questions, what is the abandonment option value? $11.75 million $14.68 million $34 33 million KD $12.84 million