Question: Revisit General Designs option to grow in Problem 17. Suppose you are at time 2, and stage 1 has been successful. Because the stage 2

Revisit General Design’s option to grow in Problem 17. Suppose you are at time 2, and stage 1 has been successful. Because the stage 2 cash flows are now relatively certain, their discount rate is now 10 percent (which is lower than the discount rate for stage 1).
a. What is the revised NPV at time 2 of stage 2?
b. What is the revised total NPV at time 0 for both stages?

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