Question: Two projects have the following cash flows. Project B allows the firm to abandon the project with a salvage value of $200 in year 2

Two projects have the following cash flows. Project B allows the

Two projects have the following cash flows. Project B allows the firm to abandon the project with a salvage value of $200 in year 2 if the economy is poor (50\% chance). Assume r=20%. Project A (no embedded options): Project B (with an abandonment option in the second year): What is the value of the option to abandon

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