Question: Please solve both questions and try to give typed answer in a good language, i will really appreciate it, thanks 5) A) B. Ltd. is

Please solve both questions and try to give typed answer in a good language, i will really appreciate it, thanks

5) A) B. Ltd. is considering a project requiring initial outlay of 10 Lac. The expected cash inflow from operation is 170,000 annually for 15 years. Cost of capital is 18%. The consultancy group believe that the Govt. is considering change in its industrial policy. Under this, they shall have an option of making further investment of 2 lac at the end of 5th year. The new investment will result in CFAT of 170,000 for year 5 to 15. Value the option. B) Explain Real Options. Describe any two types in detail

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