We are examining a new project. We expect to sell $8,750$ units per year at $$189$ net cash flow apiece $($including CCA$)$ for the next $16$ years. In other words, the annual operating cash flow is projected to be $$189\backslash$times $8,750=$ $$1,653,750.$ The relevant discount rate is $14\%,$ and the initial investment required is $$5,500,000.$ Suppose you think it is likely that expected sales will be revised upward to $9,500$ units if the first year is a success and revised downward to $4,300$ 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.$)$

NPV $

b$.$ After the first year, the project can be dismantled and sold for $$2,800,000.$ What is the value of the option to abandon? $($Negative 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.$)$

The value of the option to abandon $