QUESTION 9 Houston Corporation is drilling an oil well. The drilling rig costs $720 today, and in one year the well is either a success or a failure The outcomes are equally likely. The discount rate is 12%. The PV of the successful payoff at t=1 is $1,300. The PV of the unsuccessful payoff at t=1 is $O. However, in case of failure, the firm can abandon the rig and sells it for $420. What is the value of the abandonment option? (Hint the value of 420 What is the value of the abandonment option (Hint, the value of the abandonment option is the difference between the NPV of the project with the abandonment option and the NPV of the project without the abandonment option) O $115.00 $75 00 $61.50 $136.50 $187.50 QUESTION 10 Consider a five-year project with the following information initial fixed asset investment = $600,000, straight-line depreciation to zero over the five-year life, zero salvage value price = $29, variable costs - $16, fixed costs = $290 000 quantity sold = 68,000 units, tax rate = 25% How sensitive is OCF to changes in quantity sold (ie, the change in OCF given one unit increase in quantity)? $11.15 $10.75 $10.25 $9.75 $9.55 Click Save and Submit to save and submit. Click Save All Answers to save all answers