a Search this cou MC.12.073 Question 21 of 35 Aggarwal Enterprises is considering a new project that has an initial cash outflow of $1,000,000, and the CFO set up the following simple decision tree to show its three most-likely scenarios. The firm could arrange with its work force and suppliers to cease operations at the end of Year 1 should it choose to do so, but to obtain this abandonment option, it would have to make a payment to those parties. How much is the option to abandon worth (in thousands of dollars) to the form? Do not round the intermediate calculations. WACC - O.O. 11.5% t=0 Dollars in Thousands NPV this t=1 t-2 t-3 State $800.0 $800.0 $800.0 $938.1 Probx NPV $187.6 Prob - 20% Prob o 60% -$1,000 $520.0 $520.0 $520,0 $259.8 $155.9 Prob 20% -$170,0 $170,0 $170.0-$1,411.8 $282.4 Exp. NPV $61.1 a. 557.1 1.5597 $51.9 d. $58.1 e. $44.6 e fees Key 4 FB 0 FY2 6 & 7 00 * 9 0 Y U { 0 H. . a Search this cou MC.12.073 Question 21 of 35 Aggarwal Enterprises is considering a new project that has an initial cash outflow of $1,000,000, and the CFO set up the following simple decision tree to show its three most-likely scenarios. The firm could arrange with its work force and suppliers to cease operations at the end of Year 1 should it choose to do so, but to obtain this abandonment option, it would have to make a payment to those parties. How much is the option to abandon worth (in thousands of dollars) to the form? Do not round the intermediate calculations. WACC - O.O. 11.5% t=0 Dollars in Thousands NPV this t=1 t-2 t-3 State $800.0 $800.0 $800.0 $938.1 Probx NPV $187.6 Prob - 20% Prob o 60% -$1,000 $520.0 $520.0 $520,0 $259.8 $155.9 Prob 20% -$170,0 $170,0 $170.0-$1,411.8 $282.4 Exp. NPV $61.1 a. 557.1 1.5597 $51.9 d. $58.1 e. $44.6 e fees Key 4 FB 0 FY2 6 & 7 00 * 9 0 Y U { 0 H