Look again at Table 22.2 . How does the value in 1982 of the option to invest in the Mark II change if:

a. The investment required for the Mark II is $800 million (vs. $900 million)?

b. The present value of the Mark II in 1982 is $500 million (vs. $467 million)?

c. The standard deviation of the Mark II’s present value is only 20% (vs. 35%)?

AppendixLO1