please explain it

9. Decision tree with multiple decision points Purple Whale Inc. Co. is planning to add a new product line to make Cars. However, Purple Whale Inc. is considering the possibility of abandoning the project if the demand for the new product is low. In the following decision tree table, (1). (29 and (3) represent decision points, also known as decision nodes or stages. The dollar value to the right of each decision node represents the net cash flow at that point, and the cash flows shown under t - 3, 4 and 5 represent the cash inflows if the project is pushed on to completion. 11 Purple Whale Inc. Co. decides to launch the new line for iCars at Stage (1), then it will spend $80,000 on the marketing study. If the marketing study yields positive results, then the firm will spend $900,000 on the prototype. If the prototype works well, then the firm will spend several millions more at Stage (3) to build a production plant. Suppose that as an analyst at Purple Whale Inc you have to analyze sequential decisions. By studying the following decision tree, you learn which of the following? Check all that apply. There is a 25% probability that the marketing study will produce positive results, There is a 25% probability that the marketing study will produce negative results, in the project is canceled after Stage (1), the cost to Purple Whale Int. Co. will be the $80,000. There is a 50% probability that the marketing study will produce positive results. Complete the decision tree table by calculating the net present values (NPV) and joint probabilities, as well as products of joint probabilities and NPV for each decision branch. Assume that the weighted average cout of capital (WACC) is 8% for all decision branches. Hint: Use either a spreadsheet program's functions or a financial Calculator for this task. Round the NPVs to the nearest dollar and remember to enter the minus sign if a value is negative If the project is canceled after Stage (1), the cost to Purple Whale Inc. Co will be the $80,000. There is a 50% probability that the marketing study will produce positive results. Complete the decision tree table by calculating the net present values (NPVs) and joint probabilities, as well as products of joint probabilities and NPV's for each decision branch. Assume that the weighted average cost of capital (WACC) is 8% for all decision branches. Hint: Use either a spreadsheet program's functions or a financial calculator for this task. Round the NPUs to the nearest dollar and remember to enter the minus sign If a value is negative. Note: All cash amounts in the following table are in thousands of dollars. Step 4 Step 2 Step 3 Step 5 Step 1 2nd Prob Invest Joint Prob (9) Prob NPV ($) 14,328 3rd Invest -$10,269 -$10,000 NPV x Joint Prob ($) 5,373 $20,065 37.50 75% (2) 50% (2) 205 (2) 30% -$300 Inflow (3) $4,761 (3) $1,900 (3) 50 50 $8,237 $2,345 so $7,800 Stop 30 1332 25 Stop $0 $0 30 -311 $ Expected NPV -391 Based on your calculations, in case Purple Whale Inc. abandons the new project right after 1.665 ting study, the loss is Complete the decision tree table by calculating the net present values (NPVs) and joint probabilities, as well as products of Joint probabilities and NPVS for each decision branch. Assume that the weighted average cost of capital (WACC) is 8% for all decision branches. Hint: Use either a spreadsheet program's functions or a financial calculator for this task. Round the NPVs to the nearest dollar and remember to enter the minus sign it a value is negative. Note: All cash amounts in the following table are in thousands of dollars. -380 Step 1 Step 4 Step 2 Step 3 Step 5 -358 Prob 2nd Invest Joint Prob (%) -198 NPV x Joint Prob ($) 5,373 Inflow (3) $4,761 (3) $1,900 (3) 30 75% Prob 3rd Invest (2) 50% --$10.269 (2) 20% -$10,000 (2) 30% Stop $0 37.50 -$300 $8,237 $2,345 $20,065 $7,800 -278 $0 $0 25 Stop $0 so $0 Expected NPV Based on your calculations, in case Purple Whale Inc. abandons the new project right after the marketing study, the loss is Complete the decision tree table by calculating the net present values (NPV) and joint probabilities, as well as products of joint probabilises and NPVS for each decision branch. Assume that the weighted average cost of capital (WACC) is 8% for all decision branches. Hint: Use either a spreadsheet program's functions or a financial calculator for this task. Round the NPVs to the nearest dollar and remember to enter the minus sign If a value is negative. Note: All cash amounts in the following table are in thousands of dollars. Step 1 Step 2 Step 3 Step 4 Step 5 -391 2nd Invest Prob Prob 3rd Invest Inflow Joint Prob (9) 14,328 NPV x Joint Prob (8) 58,23 -80 37.50 5,373 75% -$300 (2) SON (2) 20% (2) 30% -$10,269 -$10,000 Stop $0 (3) $4,761 (3) $1,900 (3) $0 $0 $2,345 $0 $20,065 $7,800 $0 -358 25% Stop $0 SO $ Expected NPV Based on your calculations, in case Purple Whale Inc. abandons the new project right after the marketing study, the loss is Complete the decision tree table by calculating the net present values (NPV) and joint probabilities, as well as products of joint probabilitles and NPU for each decision branch. Assume that the weighted average cost of capital (WACC) is 3% for all decision branches. Hint: Use either a spreadsheet program's functions or a financial calculator for this task. Round the NPUs to the nearest dollar and remember to enter the minus sign If a value is negative. Note: All cash amounts in the following table are in thousands of dollars. Step Step 1 Step 2 Step 3 4 Step 5 NPV x Joint Prob 2nd Invest Joint Prob (%) Prob Prob 3rd Invest NPV ($) 14,328 Inflow ($) $20,065 37.50 5,373 75% (2) 50% (2) 20% (2) 30% -$300 - $10,269 -$10,000 Stop $8,237 $2,345 (3) $4,761 (3) $1,900 (3) $0 $7,800 $0 $80,000 $0 25% Stop $0 $391,000 $0 50 $0 $300,000 Expected NPV = $81,000 Based on your calculations, in case Purple Whale Inc. abandons the new project right after the marketing study, the loss is