Assume that the cash flows associated with a project can be represented by the

following decision tree $($conditional probabilities are in parentheses$)$:

You should now be able to calculate the net present value of this project if the cost of

capital is $18$ percent. Assume now that the firm has the ability to abandon this project

at Year $1($right after observing the cash flow at Year $1)$ and receive $$680$ at Year $1.$

Using the discounted cash flow $($DCF$)$ methodology used in class, determine the

increase in the net present value of this project when the ability to abandon is included.