plz urgent need

QI. Xonic Graphic is evaluating a new for its equipment. technology Will have a 3year life and COSt Sl Its on cash flows is subct to risk. Management estimates that there is SO-SO chance that technology Will either save the company S I in the first year or save it nothing at all, If nothing at savings in the last 2 years would be Even worse. in the second year. an 'Elditional outlay Of may be required to convert back to original process. for the new technology may result in less efficiency. Management attaches 40 percent probability to this given fact that new technology "bombs out" in the first year. If the technology proves it self. second-year cash nows may be either Sl or S with probabilities of 0.25. 0.5 and 0.25. respectively. In the third-year cash flows are expected to S2() greater $2() less than the cash flows in the period 2. with an equal chance of occurrence. (Again these cash flows depend on the cash flows in the period I being SI.OOO). All cash flows are after tax. page i of 5 a) Set up a probability tree to depict the foregoing cash flow probabilities compute expected NPV and risk for aforesaid data if risk free rate Of return is b) Discuss risk and real options in capital budgeting analysis With the help text book example.