... A-T net CFs of $150,000, and a 40% chance it will produce annual A-T net CFs of -$ 25,000 1 2-1 3 Abandonment decision tree 150,000 60% prob -$ 200,000 40% prob 150,000 150,000 -2 5,000 -2 5,000 -2 5,000 ... 10% discount rate, what is Project Y’s NPV? k = 10% -$ 200,000 80,000 80,000 80,000 NPV = -$ 1,051.84 1 2-1 2 Abandonment option Project Y’s A-T net cash flows depend critically upon customer acceptance ... analysis 1 2-3 Replacement chain Use the replacement chain to calculate an extended NPVS to a common life Since Project S has a 2-year life and L has a 4-year life, the common life is years 10% -1 00,000...