We are examining a new project. We expect to sell $8,500$ units per year at $$175$ net cash flow aplece $($including CCA$)$ for the next $16$

years. In other words, the annual operating cash flow is projected to be $$1758,500=$$$1,487,500.$ The relevant discount rate is $19\%,$

and the initial investment required is $$4,947,000.$ Suppose you think it is likely that expected sales will be revised upward to $9,250$

units if the first year is a success and revised downward to $4,050$ units if the first year is not a success.

a$.$ If success and failure are equally likely, what is the NPV of the project? Consider the possibility of abandonment in answering. $($Do

not round intermediate calculations. Round the final answer to $2$ decimal places. Omit $ sign in your response.$)$

b$.$ After the first year, the project can be dismantled and sold for $$2,517,000.$ What is the value of the option to abandon? $($Negotive

answer should be indicated by a minus sign. Do not round intermediate calculations. Round the final answer to $2$ decimal places.

Omit $ sign in your response.$)$