Question: In Problem 9.12, suppose you think it is likely that expected sales will be revised upward to 11,000 units if the first year is a

In Problem 9.12, suppose you think it is likely that expected sales will be revised upward to 11,000 units if the first year is a success and revised downward to 4,000 units if the first year is not a success.

a. If success and failure are equally likely, what is the NPV of the project? Consider the possibility of abandonment in answering.

b. What is the value of the option to abandon?

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