The following facts have been assembled to facilitate an analysis of an option to abandon a project currently being considered by Xiaomi Group ltd:

Risk-free rate of return	8%
Time until decision to abandon is taken	0.64 years
PV of cash flows if the project is not abandoned	Ksh.415 million
Salvage value if abandoned	Ksh.480 million

The variance of the projects rate of return is being considered at different levels as follows:

Var-1	3%
Var-2	6%
Var-3	9%
Var-4	12%

Required:

Assess the effect of a change in the variance on the Value of the Abandonment Option Using black-Scholes options valuation model.