Drop down #1: $31,696 $24,904 $45,280 $49,808

Drop down #2: $65,750 $55,635 $45,519 $50,577

Drop down #3: $5,032 $6,356 $4,238 $5,297 $4,767

Companies often come across projects that have positive NPV opportunities in which the company does not invest. Companies must evaluate the value of the option to invest in a new project that would potentially contribute to the growth of the firm. These options are referred to as growth options. Consider the case of Sunny Co. Sunny Co. is considering a three-year project that will require an initial investment of $35,000. It has estimated that the annual cash flows for the project under good conditions will be $50,000 and $10,000 under bad conditions. The firm believes that there is a 60% chance of good conditions and a 40% chance of bad conditions. (Note: Round If the firm is using a weighted average cost of capital of 13%, the expected net present value (NPV) of the project is $45,280 your answer to the nearest whole dollar) Sunny Co wants to take a potential growth option into account when calculating the project's expected NPV. If conditions are good, the firm will be able to invest $2,000 in year 2 to generate an additional cash flow of $15,000 in year 3. f conditions are bad, the firm will not make any further investments in the project. Using the information from the preceding problem, the expected NPV of this project--when taking the growth option into account-Is (Note: Round your answer to the nearest whole dollar) Sunny Co.'s growth option is worth (Note: Round your answer to the nearest whole dollar)