Question: Growth Option: Option Analysis $ 2 5 , 0 0 0 per year for 2 years. If demand is bad ( 6 0 % probability

Growth Option: Option Analysis
$25,000 per year for 2 years. If demand is bad (60% probability), then the net cash flows will be $5,000 per year for 2 years. Fethe's cost of capital is 10%.
a. What is the expected NPV of the project? Round your answer to the nearest dollar.
$
calculations. Round your answers to the nearest dollar.
Use computer software packages, such as Minitab or Excel, to solve this problem.
Value of the growth option: $
Value of the entire project: $
Growth Option: Option Analysis $25,000 per year for 2 years. If

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