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Please answer this question: Refer to Exhibit 2 6 . 4 . Now assume that one year from now SI will know if the Z

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Refer to Exhibit 26.4. Now assume that one year from now SI will know if the Z-45 has become the industry standard. Also assume that after receiving the cash flows at t =1, SI has the option to abandon the project, in which case it will receive an additional $100,000 at t =1 but no cash flows after t =1. Assuming that the cost of capital remains at 12%, what is the estimated value of the abandonment option?
Question 35 options:
1)0
2) $2,075
3) $4,067
4) $8,945
5) $10,745

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