3. You have a biotech drug project that requires a $40 million investment. The project will provide cash flows with present value of $41 million if done now. Suppose that the project could be delayed, and the option to delay the project for 2 years is worth $6 million.

1. Should you accept the project now or delay. Briefly explain why or why not.

2. Suppose that you could develop a second improved biotech project in 2 years, and the option to that is worth $3million. If you delay, you will lose the option to develop the improved version. Should you accept the first project now or delay it? Briefly explain why or why not.

3. Redo part B but assume that you do not lose the chance to do the second project if you delay the first one. Should you accept the first project now or delay it? Briefly explain why or why not.