We expect to sell 200 units per year at $1 net cash flow each into perpetuity (i.e., we expect net cash flows of $200 per year in perpetuity). In one year, we will know more about the project. If it looks successful, sales projections will be revised upward to 250 units per year and, if the project looks like a failure, sales projections will be revised downward to 150 units per year. Assume that success and failure are equally likely. The project costs $900 and the discount rate is 20%. If we decide to abandon the project at the end of the first year, we can sell it for $800.

Use the decision tree method to determine the NPV of the project.