The ability of the firm to abandon a project has been described as a real option. Discuss how this real option can alter the capital budgeting process. When might a project be abandon? Consider the following cash flows (CFs) that Pantera Enterprises' estimated soon after accepting this project. These CFs were re-estimated after important information was received. What is the NPV of the project give this new information? Now suppose that Pantera Enterprises could be offered the abandonment values at the end of period 1 or 2 listed below. What is Pantera's optimal strategy if it's WACC is 10%? Please show work

Year(t)	CFs	Net abandonment values at the end of (t)
0	-21,000
1	9,069	13,651
2	9,350	6,020
3	6,545