$3$a$.$ Space Exploration Technologies Corp is considering investing in a new space mining project that aims to extract minerals from close$-$ to$-$earth celestial bodies. With the current state of technology this is a highly risky venture that has:

$($i$)$

$25\%$ probability of being successful and would generate $1$ billion a year for ever;

$($ii$)$

$75\%$ probability of not being successful and in that case, it would not generate any cash flows.

The initial outlay for the project would be $2\mathrm{.}5$ billion and the firm operates at a $17\%$ cost of capital. How should the firm think through whether to undertake the project or

not?

b$.$ How does risk affect value creation? Could financial engineering and$/$or hedging contribute to it$?$