7. Geddes & Ing Company (GI) is considering the purchase of a creative packaging company, which would require an initial investment of $200 million. This venture would produce net cash flows of $40 million at the end of each of the next 20 years The cost of capital for the paper company is 12.5%. Page 3 of 4 GI's best guess is that cash flows will be $40 million a year, but it realizes that the cash flows are as likely to be $25 million a year as $55 million, i.e. a 50:50 percent probability of either. Two years from now, GI will find out whether the cash flows will be $25 million or $55 million. If GI waits two years, the initial investment will remain at $200 million. Assume that all cash flows are discounted at 12.5%. Use decision-tree analysis to determine whether GI should proceed with project today or wait two years before making the purchase decision? (9 marks)