18. Abandonment In the previous problem, suppose you think it is likely that expected sales will...
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18. Abandonment In the previous problem, suppose you think it is likely that expected sales will be revised upward to 17,000 units if the first year is a success and revised downward to 3,400 units if the first year is not a success. Page 282 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? 18. Abandonment In the previous problem, suppose you think it is likely that expected sales will be revised upward to 17,000 units if the first year is a success and revised downward to 3,400 units if the first year is not a success. Page 282 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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