You are considering introducing a new$$ Tex$-$Mex$-$Thai fusion restaurant. The initial outlay for this new restaurant is $$$$6\mathrm{.}4$million$,$ and the present value of the free cash flows$($excluding the initial$$ outlay$)$ is $$$$7\mathrm{.}6$million$,$ so the$$ project, as it is now$$ envisioned, has an expected NPV of negative $ $1\mathrm{.}2$ million. Given its negative$$ NPV$,$ you decide to take a closer look at firm cash flows. From this$$ analysis, you estimate that there is a $55$ percent chance that the new restaurant will be well received and will produce annual cash flows of $$$$811$ comma $000$ forever$($a perpetuity$)$;$$ however, there is a $45$ percent chance that the new restaurant will not be well received and will produce annual cash flows of only $$$$193$ comma $000$ forever$($a perpetuity$).$ If the new restaurant is$$ successful, you will be able to build $10$ more of them by the end of the$$ year, and they will have costs and cash flows like those of the successful restaurant. The required rate of return you use to discount the project cash flows is $10\mathrm{.}3$ percent.

a$.$ Although the first restaurant has a negative$$ NPV$,$ should you build it$$ anyway? Why or why$$ not? $($Select the best choice$$ below.$)$

A$.$

You should open the first$$ restaurant, because you have nothing to lose should the concept fail.

B$.$

You should not open the first$$ restaurant, because if you do not open the first$$ restaurant, you will never know whether this type of restaurant will be successful.

C$.$

You should not open the first$$ restaurant, because you should never undertake risky investments.

D$.$

You should open the first$$ restaurant, because if you do not open the first$$ restaurant, you will never know whether this type of restaurant will be successful.