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Question $7(1$ point$)$

A firm is considering a project. Initial cost is $$60$ million, Cost of Capital is $10\%,$ risk free rate is $6\%,$ project life is $3$ years. If the demand is high, the project can generate $$40$ million cash inflows each year. If the demand is normal, the project can generate $$30$ million cash inflows each year. If the demand is low, the project can generate $$20$ million cash inflows each year. The probabilities of high demand, normal demand, and low demand are $20\%,60\%,$ and $20\%$ respectively. What is the expected NPV of the project if a firm starts the project now?

$$12\mathrm{.}90$

$$14\mathrm{.}61$

$$19\mathrm{.}35$

$$16\mathrm{.}12$