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Albert CO please answer this question it has 2 parts Albert now wants to take into account its ability to abandon the project at the

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Albert CO

please answer this question it has 2 parts

image text in transcribedimage text in transcribed

Albert now wants to take into account its ability to abandon the project at the end of year 2 if the project ends up generating the worst-case scenario cash flows. If itdecides to abandon the project at the end of year 2, the company will receive a one-time net cash inflow of $3,000 (at the end of year 2). The $3,000 the company receives at the end of year 2 is the difference between the cash the company receives from selling off the project's assets and the company's $2,500 cash outflow from operations. Additionally, if it abandons the project, the company will have no cash flows in years 3 and 4 of the project. using the information in the preceding problem, find the expected NPV of this project when taking the abandonment option O O O O into account. $24,725 $30,219 $27,472 $34,340 What is the value of the option to abandon the project?

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