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/courses/4342327 Question 15 The cash flows associated with a project can be represented by the following decision tree (conditional probabilities are in parentheses): Year 0
/courses/4342327 Question 15 The cash flows associated with a project can be represented by the following decision tree (conditional probabilities are in parentheses): Year 0 Year 1 Year 2 Year 3 $200 (5) $300 (5) $400 (5) $400 (5) $400 (5) $500 (-5) $600 (5) $600 $600 (5) $500 (5) $700 (5) $700 (5) $900 (5) $700 (5) $800 (5) The firm has the ability to abandon this project at Year 1 and receive $780 at Year 1. Using a risk- adjusted discount rate of 10 percent, determine the increase in the net present value for this project when abandonment is considered. $26.54 $30.88 O $42.79 2200
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