Question: DR. P is considering a new project based on the information below. However, the firm has an option to abandon the project after the

DR. P is considering a new project based on the information below.

DR. P is considering a new project based on the information below. However, the firm has an option to abandon the project after the 2nd year. What is the Expected NPV of the project if they abandon Scenario 3at the end of year 2? WACC for the project 0.080 data in thousands 0 1 2 3 Initial costs 2,993 Prob Scenario 1 25% 2,590 2,590 2,590 Scenario 2 60% 1,790 1,790 1,790 Scenario 3 15% -772 -772 -772

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