Parvati wants to undertake a project that costs $10,000 and shall generate CFs of $1500 each year for the next 9 years. If the cost of capital is 7% find the NPV. Parvati wants to incorporate an option to abandon and commissions a study to estimate future Cash Flows. She finds that from year 2 the CFs can go up to $2000 each year for the remaining years of the project with a probability of 7/10 or go down to $1100 for the remaining project years. Parvati can also abandon the project and sell it for scrap for $1000. What is the new NPV assuming that the cost of capital increases to 9%?

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A D E H K M N P Q R S T U U V W Cost Units Price VC NWC Depreciation 7 Taxes 10 Sales 11 vc Ti 12 FC 13 Dep 14 EBIT 15 Dep 16 Taxes 12 OCF 10 ATSV 19 Change in NWC 20 CFA 21 22 NWC 23 24 E 25 PS 26 D 26 27 v 28 We 2. Wps 30 Wd 31 Re 32 Rps 33 Rd 34 WACC 35 36 FLTCe 37 FLTCps 38 FLTCd 39 WAFLTC 40 Amount Needed 41 FLTC