Peer Properties is considering spelling $6.2 million today(t = 0) to build a factory. The after-tax cash flows the factory generates will depend on whether the state imposes a new property tax. There is a 50% chance that the tax will pass, in which case the factory will produce after-tax cash flows of $1,000,000 at the end of each of the next 5 years and the NPV is $2, 595, 224. There is a 50% chance that the tax will not pass, in which case the factory will produce after-tax each flows of $2,000,000 for the next 5 years and the NPV is $1,009, 552. The project has a WACC of 12%. The following summarizes the information: If the factory is unsuccessful, the firm will have the option to abandon the 1 year from now if the tax passes. If the factory project is abandoned, the property can be sold in one year for cash inflows from it. What is the value of this abandonment option? a. $429, 755 b. -$745, 455 c. $1, 322, 612 d. $1, 355, 960 e. $876, 183 Consider the following mutually exclusive projects, for a firm using a discount rate of10%: Which project(s) should the firm accept? a. Project A since it has the highest positive NPV. b. All projects since they all have positive NPV. c. None of the projects. d. Not enough information to tell