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Business, 25.05.2021 16:10 timithythaxton

Refer to data for Steppingstone Incorporated (SI). Now assume that one year from now SI will know if the Z−45 has become the industry standard. Also assume that after receiving the cash flows at t = 1, SI has the option to abandon the project, in which case it will receive an additional $100,000 at t = 1 but no cash flows after t = 1. Assuming that the cost of capital remains at 12%, what is the estimated value of the abandonment option?

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Refer to data for Steppingstone Incorporated (SI). Now assume that one year from now SI will know if...
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