Problem 1. In your new role as a project financial analyst, you are tasked to evaluate project 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 first, both, or neither. Phase 1 (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. At this year 1 point and after cash flows have been received, you may invest an additional $100 for Tetra 2. 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 1 a: How much would the Tetra project be worth if it offered only the Tetra 1 opportunity?

Typing Numbers is okay Utilize Equations/functions 5 6 The Scenario Labels Hints 0.10 required return 0 1 7 8 9 10 Part 1 a 11 Tetra 1 best 12 Project CF 13 PV Project CFS 14 NPV 15 16 Tetra 1 worst 17 Project CF 18 PV Project CFS 19 NPV 20 NPV of whole project 0 1 accept/reject? (choose 1) Typing Numbers is okay Utilize Equations/functions 5 6 The Scenario Labels Hints 0.10 required return 0 1 7 8 9 10 Part 1 a 11 Tetra 1 best 12 Project CF 13 PV Project CFS 14 NPV 15 16 Tetra 1 worst 17 Project CF 18 PV Project CFS 19 NPV 20 NPV of whole project 0 1 accept/reject? (choose 1)