Aggarwal Enterprises is considering a new project that has an initial cash outflow of $1,000,000,and the CFO set up the following simple decision tree to show its three most-likely scenarios.The firm could arrange with its work force and suppliers to cease operations at the end of Year 1 should it choose to do so,but to obtain this abandonment option,it would have to make a payment to those parties.How much is the option to abandon worth (in thousands of dollars)to the firm? Do not round the intermediate calculations.

A) $59.7
B) $44.6
C) $58.1
D) $57.1
E) $51.9

Question

Aggarwal Enterprises is considering a new project that has an initial cash outflow of $1,000,000,and the CFO set up the following simple decision tree to show its three most-likely scenarios.The firm could arrange with its work force and suppliers to cease operations at the end of Year 1 should it choose to do so,but to obtain this abandonment option,it would have to make a payment to those parties.How much is the option to abandon worth (in thousands of dollars) to the firm? Do not round the intermediate calculations.

A) $59.7 
B) $44.6 
C) $58.1 
D) $57.1 
E) $51.9

Quizplus · Accepted Answer

The Answer of Aggarwal Enterprises is considering a new project that has an initial cash outflow of $1,000,000,and the CFO set up the following simple decision tree to show its three most-likely scenarios.The firm could arrange with its work force and suppliers to cease operations at the end of Year 1 should it choose to do so,but to obtain this abandonment option,it would have to make a payment to those parties.How much is the option to abandon worth (in thousands of dollars)to the firm? Do not round the intermediate calculations. ​

A) $59.7 
B) $44.6 
C) $58.1 
D) $57.1 
E) $51.9

Aggarwal Enterprises Is Considering a New Project That Has an Initial