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Assume that Four Seasons International is considering taking a 20-year project which requires an initial investment of $250 million in a real estate partnership to

Assume that Four Seasons International is considering taking a 20-year project which requires an initial investment of $250 million in a real estate partnership to develop time share properties with Spanish real estate developer, and where the PV of expected cash flows is $339 million. While the NPV of $4 million is small, assume that four Seasons International has the option to abandon this project any time by selling its share back to the developer in the next 5 years for $150 million. A simulation of the cash flows on this time share investment yields a variance in the PV of the cash flows from being in the partnership of 0,09. The 5-year risk-free rate is 7%. Calculate the total NPV of the project, including the option to abandon.

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