I've changed the numbers on excel so I understand the idea a little better and it is fresher, I did not understand the assignment and ended up doing badly. I need some help understanding before my midterm. My professor didn't really explain well but I really would like help and how to do the functions as formulas in the excel sheet. I know it seems like a lot, but I really need help understanding because I do not know where to start.

A B C D E F G H K JTM 2 Rates: 3 Discount rate 7.0% Option Pricing: 4 Risk-free rate 2.5% PV of Cap. Ex. (Yrs. 1-2) 5 Scenario: No Real Options Maturity Start 1 IN 4 S 6 PV of NCF 7 Cash from Operations 2.3 3.1 3.8 4.6 5.3 6.1 Risk free rate 8 minus: Capital Expenditures 1.0 2.2 3.0 3.7 4.5 5.2 6.0 Volatility 9 = Net Cash Flow BS calculations: 10 Terminal Value 5.0 d1 #DIV/O! 11 PV of NCF N(d1) #DIV/O! 12 Scenario: Real Options d2 #DIV/O! 13 Start 1 2 4 6 N(d2) #DIV/O! 14 Cash from Operations 2.3 3.1 3.8 4.6 5.3 6.1 Price of call #DIV/O! 15 minus: Capital Expenditures 1.0 3.7 4.5 5.2 6.0 Difference: 16 = Net Cash Flow - Value of Call over No Real Option 17 Terminal Value 5.0 - % of PV of No Real Option 18 PV of NCF 19 PV of Cap. Ex. (Yrs. 1-2) Answer part B, 4 in the box below: 20 21 221. Real Options A. JTM is looking to buy gates at their home airport. Its discount rate is 7%; the risk free rate is 2.5%. What is the NPV of the purchase if bought today? Use the data in the template and note that the terminal value is as of the end of year 6. B. After you do part A, you remember back to the concept of real options, which means that JTM can make dynamic changes as time passes: 1. Present valuing the purchase price of the gates (that is, the years 1 and 2 Capital Expenditures) separately using the risk-free rate because once JTM decides to go with the purchase there is no risk. 2. Present valuing the Net Cash Flow excluding those Cap Ex. This calculation will include Cap. Ex. For years 3-6 as they are part of the normal operation of the gates and are unrelated to the purchase price. 3. Use the Black-Scholes Option Pricing formula to come up with option's priceassuming a 1-year maturity and a 20% price volatility for gate prices