1. An abandonment option will have an upfront cost of $1.0 million. There is a 40% chance that the abandonment option would be used, in which case cash outflows of $800,000 in Year 4, $1,400,000 in Year 5 and $1,200,000 in Year 6 will be avoided. If the discount rate is 7.0%, should the abandonment option be exercised?

   	a.	Yes because its impact on expected NPV is about $47, 600.
   	b.	Yes because its impact on expected NPV about $101,000.
   	c.	No because its impact on expected NPV is about ($37,000).
   	d.	No because its impact on expected NPV is about ($23,700).