Attempts: Keep the Highest: 13 8. Abandonment options Herman Co. is considering a four-year project that will require an initial investment of $12,000. The base-case cash flows for this project are projected to be $15,000 per year. The best-case cash flows are projected to be $22,000 per year, and the worst case cash flows are projected to be -$1,500 per year. The company's analysts have estimated that there is a 50% probability that the project will generate the base-case cash flows. The analysts also think that there is a 25% probability of the project generating the best care cash flows and a 25% probability of the project generating the worst-case cash flows What would be the expected not present value (NPV) of this project of the project's cost of capital is 10% $26.619 $23,017 523,020 $25,218 Herman now wants to take into account its ability to abandon the project at the end of year 2 if the project ends up onerating the worst case scenario cash rows it decides to abandon the project at the end of year 2, the company will receive a 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 rectives from selling of the projects and the company's -51,500 cash out tow from operations: Additionally, if it abandon the project, the company will have no cash rows in and of the project A Luing the information in the preceding problem, and the expected NPV of this project when taking the abandonment option into account Herman now wants to take into account its ability to abandon the project at the end of year if the project ends up generating the worst-case scenario cash flows. If it decides to abandon the project at the end of year, the company will receive a one-time net cash inflow of $3,000 (at the end of year 2). The $2,000 the company receives at the end of year 2 is the difference between the cath the company receives from selling off the project's ones and the company's -51,500 cash outlow from operations. Additionally, iritabandons the project, the company will have no cash flows In years 3 and 4 of the project ols Using the wormation is the preceding problem, find the expected New of this project when taking the abandonment option into account $32,436 actory . 30,961 20.01 129,407 What the other option to abandon the Grade Now Save & Continue Ce without