assuming that the base asset is a project that at t = 1 can have 2 possible values V + = $ 720 and V - = $ 240, with 50% probability (real) for each price scenario. Considering also that K = 20% (adjusted risk rate, RF = 8% and that I0 = $ 416 (initial investment), calculate V (project value at t = 0), NPV and risk neutral probabilities. the manager has the flexibility to expand the project's productive capacity (doubling the project value), considering an additional investment of $ 320 million (I'1.) What would be the expanded NPV and the value of the Expansion Option? In the case of T = 1 $ 150 million can be "saved" (recovered), however, a reduction of 50% of the value of the project will be calculated. and the value of the Option to Contract.