Average 73 8. Abandonment options Shan Co is considering a four-year project that will require an initial investment of $12,000. The base-case cash flows for this project are projected to be $12.000 per year. The best-case cash flows are projected to be $19,000 per year, and the worst case cash flows are projected to be -$3,000 per year. The company'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-cate cash flows and a 25% probability of the project generating the worst case cash Rows. What would be the expected net present value (NPV) of this project if the project's cost of capital is 1492 O $14.567 O $18.852 $19.709 O $17.138 Shan now wants to take into account is 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 $4,750 (at the end of year 2). The 54.750 the company receives at the end of year 2 is the difference between the cash the company receives from selling off the project's assets and the company's - $3,000 cash oudiow from operations. Additionally, if at 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 option into account, O $19.579 O $18.600 O $23.495 $24.474 What is the value of the option to abandon the project