4. Investment timing option Decision tree and the Black-Scholes valuation Aa Aa Suppose a technical glitch in the trading systems in the stock markets led to several "erroneous trades." Soon after, Lesnor Co., a professional training company, came up with the idea of developing a new division that would teach securities traders to communicate by using an old style of hand language on the trading floor, which would help revive that dying language A young product development employee, Ryan, proposed this idea and also submitted the following details about the project .The division would need an initial investment of $4.0 million . Ryan expects that this division will bring in an additional $3.5 million at the end of each of the next five years . The project's cost of capital is 12%, and the risk-free rate is 4%. The WACC is used to discount all cash flows Based on the given information, what is the project's expected net present value (NPV)? O $9.48 million $8.62 million O $12.93 million $6.90 million After further research, Ryan added a few more details about the project to the proposal. When Ryan submitted the proposal, he again included the probability of the project's success based on whether a financial services tax would be imposed on the revenues from the project for stock broker training Based on discussions with lawyers, there is a 60% chance that the tax would not be imposed, in which case the project would generate a cash flow of $5.3 million. If a financial services tax is imposed, the project would generate a cash flow of $0.8 million. Lesnor Co. now has the option of knowing about the tax situation before it commits to the project