High Roller Properties is considering building a new casino at a cost of $10.0 million. The after-tax cash flows the casino generates will depend on whether the state imposes a new income tax, and there is a 50-50 chance the tax will pass. The company has a choice to continue with the project or abandon the project. The following are the estimated NPVs under each scenario. Calculate the expected NPV of the project without the abandonment option and with the abandonment option. What is the value of the abandonment option?

	Probability	NPV
Without Abandonment Option
No Tax	40%	4870
New Tax	60%	-4100
With Abandonment Option
No Tax	40%	4870
New Tax	60%	-3750

		$945
		$560
		$175
		($175)