9. Decision tree with multiple decision points Green Moose Industries is planning to add a new product line to make iCars. However, Green Moose Industries is considering the possibility of abandon project if the demand for the new product is low. In the following decision tree table, (1), (2) and (3) represent decision points, also known as decision nodes or stages. The dollar value to the right o decision node represents the net cash flow at that point, and the cash flows shown under t = 3,4, and 5 represent the cash inflows if the project is pu to completion. If Green Moose Industries decides to launch the new line for iCars at Stage (1), then it will spend $20,000 on the marketing study. If the marketing st yields positive results, then the firm will spend $100,000 on the prototype. If the prototype works well, then the firm will spend several millions more a (3) to build a production plant. Suppose that as an analyst at Green Moose Industries you have to analyze sequential decisions. By studying the following decision tree, you learn whic following? Check all that apply. If the project is canceled after Stage (1), Green Moose Industries's costs will be $260,000 There is a 10% probability that investment in a production plant will yield bad results. If the project is canceled after Stage (1), the cost to Green Moose Industries will be the $20,000. If the project is canceled after Stage (1), Green Moose Industries's costs will be $10,269,000. Complete the decision tree table by calculating the net present values (NPVS) and joint probabilities, as well as products of joint probabilities and NPVS each decision branch. Assume that the weighted average cost of capital (WACC) is 10% for all decision branches. Hint: Use either a spreadsheet progr functions or a financial calculator for this task. Round the NPVs to the nearest dollar and remember to enter the minus sign if a value is negative. Note: All cash amounts in the following table are in thousands of dollars. Step o 1st Invest Step 1 Prob2nd Invest Step 2 3rd Invest Step 3 Inflow Step 4 Inflow Step 5 Inflow Prob NPV ($) Joint Prob (%) NPV x Joint Prob ($) 13,084 - 85% $100 (2) 50% (2) 40% (2) 10% -$10,269 $10,000 stop $0 (3) $4,761 (3) $1,900 (3) $0 $0 $8,237 $2,345 $0 $0 $20,065 $7,800 $0 $0 (1) -$20 15% Stop Expected NPV = Based on your calculations, you recommend that Green Moose Industries delays the new project accepts the new project rejects the new project discontinues all old products and switches to iCars Flash Player WIN 32,0,0,363