A project manager is evaluating a project and initially forecasts that the project will lasts for four years and has its annual marketing and support costs of $1,000,000 and its annual revenue of $10,000,000. The project pays a 40% tax rate on its pre-tax income and its cost of capital is 1596. While analysing a situation that competitors can run their big promotion programs during the project's life, the manager proposes one solution to the situation by increasing the marketing and support costs by 60% of the originally forecasted level and simultaneously lowering the forecasted revenue 30% of the originally forecasted level. The change in the net present value (NPV) of the project is closest to: OA. -$6,166,753.26 OB. -$6,656,717.44 C. 56,166,753.26 OD. $6,656,717.44 Food For Less (FFL), a grocery store, is considering offering one hour photo developing in their store. The firm expects that sales from the new one hour machine will be $150,000 per year. FFL currently offers overnight film processing with annual sales of $100,000. While many of the one hour photo sales will be to new customers, FFL estimates that 50% of their current overnight photo customers will switch and use the one hour service. The level of incremental sales associated with introducing the new one hour photo service is closest to: O $120,000 O $150,000 O $100,000 O $130,000 TPG Inc. is evaluating an investment project that lasts for four years. The project has the cost of capital of 15% and requires an initial investment of $5 million today. The size of the annual cash flows will depend on future market conditions. There is a 30% probability that the market conditions will be good, in which case the project will generate free cash flows of $4 million per year during the next four years. There is also a 70% that the market conditions will be bad, in which case the project will only generate free cash flows of $0.5 million per year for the next four years. While TPG is fairly confident about its cash flow forecast, it recognizes that it will have more information about the market conditions if it delays its investment in the project until next year. This delay also means that the firm will give up one year of positive free cash flows. However, if market conditions are good, the firm will proceed with the investment project; if market conditions are bad, the firm will not proceed with the investment project. The firm estimates that the net present value (NPV) of the project without the option to delay and the NPV of the project with the option to delay would be closest to: A. The NPV of the project without the option to delay is - $3.57 million and the NPV of the project with the option to delay is $3.59 million B. The NPV of the project without the option to delay is - $0.57 million and the NPV of the project with the option to delay is $6.42 million The NPV of the project without the option to delay is - $0.57 million and the NPV of the project with the option to delay is $1.08 million D. The NPV of the project without the option to delay is -$3.57 million and the NPV of the project with the option to delay is $1.08 million