Shan Co, is considering a four-year project that will require an initial investment of $5,000. The base-case cash fows for this project are projected to be $12,000 per year. The best-case cash flows are projected to be $20,000 per year, and the worst-case cash flows are projected to be $1,000 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% probabinty of the project generating the best-caso cash flows and a 251 probability of the project generating the wrorst-case cash flowis. What would be the expected net present value (NPV) of this project if the project's cost of capital is 13% ? $26.976 532,371 $28,325 925,627 Shan now wants to take into account its ability to abandon the project at the end of year 2 if the project ends up generating the worst-case scenano cash flows. If it decides to abandon the project at the end of year 2 , the company will receive a one-time het cash inflow of $3,000 fat the end of year 2). The $3,000 the company receives at the end of year 2 is the ditference between the cash the compary receives from selling off the project's assets and the company's - \$1,000 cash outlow from operations. Additionally, if it abandons the project, the company wil have no cash flows in years 3 and 5 of the project. Th 13. Assignment - Real Options and Other Topics in Capital Budgeting $28,325$25,627 Shan now wants to take into account its 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 $3, 000 (at the end of year 2). The $3,000 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 compary's $1,000 cash outflow from operations. Additionally, if it 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. $36,511$28,085$30,894$32,298 What is the value of the option to abandon the project