EXAMPLE: Option to Abandon Disney is considering taking a 25-year project, which requires an initial investment of $250 million in a real estate partnership to develop time-share properties with a South Florida real estate developer. The project has a present value of expected cash flows of $ 254 million. Assume that Disney has the option to abandon this project anytime by selling its share back to the developer in the next 5 years for $ 150 million. A simulation of the cash flows on this time-share investment yields a variance in the present value of the cash flows from being in the partnership of 20%. Assume that the 5 year risk-free rate is 4%. Should Disney take this project? EXAMPLE: Option to Abandon Disney is considering taking a 25-year project, which requires an initial investment of $250 million in a real estate partnership to develop time-share properties with a South Florida real estate developer. The project has a present value of expected cash flows of $ 254 million. Assume that Disney has the option to abandon this project anytime by selling its share back to the developer in the next 5 years for $ 150 million. A simulation of the cash flows on this time-share investment yields a variance in the present value of the cash flows from being in the partnership of 20%. Assume that the 5 year risk-free rate is 4%. Should Disney take this project