Woolworth is considering a new store in Queensland that requires anc investment of $2,500,000 now. The store is expected to generate present value cashflow of $2,000,000 per year for the foreseeable future. The standard deviation of expected cash flow is quite risky at 30%. The ten year risk-free rate is currently at 5%. The current agreement allows Woolworths to close the store anytime in the next 10 years and sell the land for $350,000 (6 marks). a. Should Woolworths accept or reject the investment opportunity after considering the abandonment option? Show your detailed calculations using the Black \& Scholes formula (3 marks). b. How would your decision change if Woolworths has an option to expand the store anytime in the next 10 years? The cost of expansion would be $1,500,000 and the best estimation of the present value of this expansion is $1,200,000 million. The standard deviation and risk-free rate will be the same as above. For part (b) assume that the 'option to abandon' does not exist