Question: Consider Problem 2 again, and suppose that the market value of the assets of the business would have a present value of $1.8 million if

Consider Problem 2 again, and suppose that the market value of the assets of the business would have a present value of $1.8 million if the business were to be liquidated after the true demand state is known. Draw a decision tree to reflect the abandonment option. Evaluate the alternatives. What is the net present value of the business if you consider the abandonment option? How valuable is the option to abandon?

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