A project with an up-front cost at t= 0 of $1500 is being considered by a cloud computing firm Upath Corporation. (All dollars in this problem are in thousands.) The project's subsequent cash flows are critically dependent on costumers' demand. There is a 75% chance that the demand will be high, in which case Upath's expected cash flows will be $500 at the end of each of the next seven years (t = 1 to 7). There is a 25% that the demand will be low, in which case the expected cash flows will be only $25 at the end of each of the next seven years (t = 1 to 7). Upath will know for sure one year from today about the customers' demand. Upath's weighted average cost of capital is 10%. The risk free rate is 6%. a. What is the project's expected net present value? b. Upath is considering whether to make the investment today or to wait a year to find out about the customers' demand. If it waits a year, the project's up-front cost at t= 1 will remain at $1,500, the subsequent cash flows will remain at $500 per year if demand is high and $25 per year if the demand is low. However, if Upath decides to wait, the subsequent cash flows will be received only for six years (t = 2 ... 7). Use decision-tree analysis to determine whether Upath should proceed with the project today or wait a year before deciding. What is the value of this option to delay if any? c. The CFO wants to use the Black-Scholes model to estimate the value of the option to delay. Specify the value of X and T in the Black-Sholes formula. d. What would be the value of P in the Black-sholes formula? e. Estimate the variance o2 in the Black-Sholes formula