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A project is worth $12 million today without an abandonment options. Suppose the value of the project is $18 million one year from today with

A project is worth $12 million today without an abandonment options. Suppose the value of the project is $18 million one year from today with high demand and $8 million with low demand. It is possible to sell off the project for $10 million if the demand is low. Calculate the value of the abandonment option if the discount rate is 5% per year.

$1.03 million
$2 million
$1.9 million

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