I posted the answer but dont know how to do the work please show me how to get there.

please do math in excel and show formulas 6. There is a 60% chance that a building on a plot of land will have NOI of 175,000 and a 40% chance it will be 125,000. Construction will cost 1.15M. You will wait one year before constructing (for simplification assume construction takes one day to complete). Therefore, the NOI will be received through year 2 (assume at the end of year). What is the value of the real option if your cost of capital is 14% and the growth rate is 2%?

6 NOI 175,000 125,000 155,000 Probability 0.6 0.4 Discount Rate g Construction 0.14 0.02 1,150,000 0 1 2 155,000 141,667 PV of land without option>>> 124,269 175,000 308,333 0.6 0 0.4 125,000 PV of land if you factor in option>>> 162,281 185,000 38,012 >>> value of option