1. The Rogers Group is considering the purchase of a new technology to help expand its current sales of widgets. The cost of the technology installed is $46.00 million. The company estimates that the present value as of the end of year one of all its cash flows (including the CF₁) is $91.20 million if the project is successful and $25.20 million if its not. The company assigns a 38% chance to success. The RRR on the project is 12%.
   1. Given the above information and based on static analysis, should the company go ahead with its investment?
   2. Upon further study the company realizes that, if the project was not successful, it can stop production and sell the equipment for an after-tax salvage value of $36 million (assume that includes the first year CF). Given this information, should the company go ahead with the investment?
   3. What is the present value of the option to abandon?