Hit or Miss Sports is introducing a new product this year. It is a see at night soccer ball. If the balls are a hit, the firm expects to be able to sell 50,000 balls at a price of 60$ each. If the new product is a bust, only 30,000 units can be sold at a price of $55. The variable cost of each ball is $30 and fixed costs are zero. The cost of the manufacturing equipment is $6 million and the project life is estimated at 10 years. The firm will use straight line depreciation. The firms tax rate is 35% and the discount rate is 12%

1. If each outcome is equally likely what is the expected NPV?
2. Now if the firm can abandon the project after 1 year if the sales are weak and sell of the remaining manufacturing equipment for 5.4 million, would this change the decision?