Question: Abert CO,is considering a four-year project that will require an initial investment of $5,000, The base-case cash flows for this project are profected to be

Abert CO,is considering a four-year project that will require an initial investment of $5,000, The base-case cash flows for this project are profected to be $15,000 per year. The best-case cash flows are projected to be $22,000 per year, and the worst-case cash flows are projected to be $1,500 per year. The compary's analysts have estimated that there is a 50% probability that the project will generate the base-case cash flows. The analysts also think that there is a 25% probability of the project generating the best-case cash flows and a 25% probability of the project generating the worst-case cash flows. What would be the expected net present value (NPV) of this project if the project's cost of capital is 14% ? $28,607 531,785 533,375 596,554 Albert now wants to take into account its ability to abandon the project at the end of year 2 if the project ends up generating the worst-case scenario cash flows. If it decides to abandon the project at the end of year 2 , the company will receive a one-time net cash inflow of $3,500 (at the end of year 2). The $3,500 the company receives at the end of year 2 is the difference between the cash the company receives from selling off the profectir assats and the companys 51,500 cash outhow from operations. Additionally, if it abandons the project, the company will have no cash flows in years 3 and 4 of the project. Using the information in the preceding problem, find the expected NPV of this project when taking the abandonment opton into account. 534,884 $39,229 $38,206 541,529 Using the information in the preceding problem, find the expected NPV of this project when taking the abandonment option into account. $34,884$33,223$38,206$41,529 What is the value of the option to abandon the project
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