Isberg Inc. is considering a project which would require a $1.875 million after-tax investment today (t = 0). The after-tax cash flows the factory generates will depend on whether the state imposes a new property tax.

There is a 55% probability that the tax will pass. If the tax passes, the factory will produce after-tax cash flows of $125,000 at the end of each of the next 5 years. There is a 45% probability that the tax will not pass. If the tax does not pass, the factory will produce after-tax cash flows of $790,000 for the next 5 years.

The project has a WACC of 10%. If the factory is unsuccessful, the firm will have the option to abandon the project 1 year from now if the tax passes. If the factory project is abandoned, the firm will receive the expected $125,000 cash flow at t = 1, and the property will be sold netting $1.2 million (after taxes are considered) at t = 1. Once the project is abandoned, the company would no longer receive any cash inflows from it.

What is the projects expected NPV if it can be abandoned?