Problem $1.$ In your new role as a project financial analyst, you are tasked to evaluate a project named Tetra, a new and innovative

software that allows doctors from around the world to communicate current best practices in real time. The project has two phases:

you may invest in the a$)$ first, b$)$ both, c$)$ neither or parts of your choosing. Phase $1($aka Tetra $1)$ requires an initial investment of $$100.$

One year later, Tetra $1$ will produce project CFs of either $$160$ or $$60,$ each with equal probability of occurrence. The second phase $($aka

Tetra $2)$ will occur one year from now and will reuqire a $$100$ initial investment. One year later, Tetra $2$ pays out either $20\%$ more in

project CFs than Tetra $1$ or $($equally likely$)20\%$ less. No taxes need to be assumed.

Part a: How much would the Tetra project be worth if it offered only the Tetra $1$ opportunity?

Part b: How much would Tetra be worth if you had to make the entire decision today, once and for all, whether or not to invest in Tetra?

Part c: How much is Tetra project worth if you have access to both Tetra $1$ and $2,$ but can wait to decide whether to invest in Tetra $2$

after $1$ year $($i$.$ e$.$ can see Tetra $1$ through$)?$ At this year $1$ point and pon receiving Tetra $1$ cash flows, you may invest an additional $$100$

to take on Tetra $2,$ or not invest.