A project requires an investment of $110 million and has expected annual cash flows of $17 million in perpetuity, starting in one year. The appropriate discount rate for the project is 14%.

The company can delay the project by 1 year. After 1 year, the company can invest $110 million to start the project and will know whether demand will be high or low. With high demand, future cash flows will be $22 million in perpetuity, starting in year 2, and $13 million otherwise.

The risk-free rate is 4%.

Part 1: What is the NPV of the project ignoring the option to delay (in $ million)?

Part 2: What is the value of the option to delay (in $ million)?

Part 3: What is the value of waiting (in $ million)?