Question: Consider the project whose cash flows are given below: a. Using the state prices, value the project. b. Suppose that at date 2 the project

Consider the project whose cash flows are given below:A 1 Project cash flows 2 3 4 5 6 7 8

a. Using the state prices, value the project.

b. Suppose that at date 2 the project can be abandoned at no cost. How is this affecting the value of the project?

c. Suppose that at any time the project can be sold for 100.

Show the tree of cash flows and value the project.

A 1 Project cash flows 2 3 4 5 6 7 8 9 B C D E F G H 169 State prices 0.3000 0.5000 130 91 90 91 70 -90

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