You're planning to scale down the operations of your

manufacturing plant by 70% sometime in the next six months.

Suppose the value of the plant today is 100m. Your plan is to

save 70% from contraction. Risk uncertainty in the operating

environment is estimated by an annualized variance of 25% in

cash flows. The risk-free rate of return is 8% per annum. Use the

binomial options pricing approach with a time step of three

months to value the option to scale down operations. Is there an

optimal time for taking such an action? Explain