Your firm is considering a project which will cost $25 million after-tax today and is expected to generate after-tax cash flows of $10 million per year at the end of the next 4 years. If the company waits for 2 years, the project will cost $27 million after-tax and there is a 90% chance that the project will generate $12 million per year for four years and a 10% chance that the project will generate $6 million per year for 4 years. Assume all cash flows are discounted at 11%. Estimate the value of the timing option. O $1.29 million O $1.67 million O $1.82 million O $1.88 million O $1.45 million Question 26 4 pts Your firm is considering a project with the following after-tax cash flows (in $millions) Cases Probability t = 0 t = 1 t = 2 t = 3 t = 4 Best 25% -21 14 14 14 14 Average 50% -21 10 10 10 10 Worst 25% -21 -9 -9 -9 -9 Your firm has an option to abandon the project after 1 year of operation, in which case it can sell the asset and receive $7 millions after taxes in cash at the end of Year 2. The WACC is 10%. Estimate the value of the abandonment option. O $5.34 million 0 $4.71 million O $5.90 million O $6.53 million O $4.15 million