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Galbraith 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

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Galbraith 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 $12,000 per year. The best case cash flows are projected to be $20,000 per year, and the worst case cash flows are projected to be $1,000 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-case cash flows and a 25% probability of the project generating the worst-case cash flows. What would be the expected net present value (NPV) of this project if the project's cost of capital is 13967 519,976 $20.975 $17.978 $15.98 Galbraith now wants to take into account its ability to abandon the project at the end of year 2 if the project ends up generating the worst-case scenario cash flow. If it decides to abandon the project at the end of year 2, the company will receive a one time net cash inflow of $3,500 (at the ond of year 2). The $3.500 the company receives at the end of vear 2's the difference between the cash the company receives from selling off the projects assets and the company's -$1.000 cash outhow from operations. Additionally. If it abandons the project, the company will have no cash flows in vers 3 and 4 of the project Using the information in the preceding problem, find the expected NPV of this project when taking the abandonment option into account

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