9 10. A mine costs $140 to go it into operation and runs for 1 year. The mine extracts 100 units of ore each year which costs $10 per unit of ore produced. Assume price of ore is expected to be $12. The discount rate is 11%. a) What is the NPV of going into operation? (Round to two decimal places.) Now, there is a 50% chance of a "high" or "low" price for ore and it will be known before production decisions are made that year. Suppose the "high" price is $15 and the "low" price is $9. (Hint: The firm has the option to ignore production.) b) What would be the cash flow when price is high? c) What would be the cash flow when price is low? d) If the firm can wait to see the price of ore before making production decisions, what would the expected cash flow be? e) What would be the option value? (Round to two decimal places.)