Aggarwal Enterprises Is Considering a New Project That Has a Cost

question 25

Multiple Choice

Aggarwal Enterprises is considering a new project that has a cost 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 to the firm?

• A)$55.08
• B)$57.98
• C)$61.03
• D)$64.08
• E)$67.29

---

Definitions:

Equilibrium

A state of balance or stability, often referring to psychological or emotional balance.

Conscious

The state of being aware of and able to think about one's own existence, sensations, thoughts, surroundings, and experiences.

Unconscious

Pertains to the aspects of the mental processes that occur without conscious perception or awareness.

Attraction

The force or influence that draws people together, often leading to friendships, romantic relationships, or other social bonds.