Question
Your firm is considering a project with the following after-tax cash flows (in $millions) Cases Probability t = 0 t = 1 t = 2
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 |
Best | 30% | -20 | 16 | 16 | 16 |
Average | 50% | -20 | 10 | 10 | 10 |
Worst | 20% | -20 | -6 | -6 | -6 |
Your firm has an option to abandon the project after 1 year of operation, in which case it can sell the asset and receive $10 millions after taxes in cash at the end of Year 2. The WACC is 10%. The projects expected NPV without the abandonment option = $ ?????? million. The project's expected NPV with the abandonment option = $ ?????? million. The value of the abandonment option = $ ?????million. Round your final answers to 2-decemial places.
Need to answer the ?????
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