Aladdin Enterprise is considering a three-year project that will require an initial investment of $44,000. If market demand is strong, Aladdin Enterprise thinks that the project will generate cash flows of $28,000 per year. However, if market demand is weak, the company believes that the project will generate cash flows of only $1,500 per year. The company thinks that there is a 50% chance that demand will be strong and a 50% chance that demand will be weak. a. If the company uses a project cost of capital of 12%, what will the expected net present value (NPV) of this project if the company is ignoring the timing option? b. Aladdin Enterprise has the option to delay starting this for one year so that analysts can gather more information about whether demand will strong or weak. If the company chooses to delay the project, it will have to give up a year of cash flows, because the project will then be only a two-year project. However, the company will know for certain if the market demand will be strong or weak before deciding to invest in it. What will be the expected NPV if Industrialization Enterprise delays starting the project? (Use the cost of capital to discount all Cash flows.) Note: In class, we show that we discount the initial investment at the risk-free rate, which gives a more conservative estimation of the project NPV. This makes sense because we dont want to over-estimate the benefit of the project. However, practitioners sometimes do discount all cash flows use the cost of capital. So we do so as an exercise here. c. What is the value of Aladdins option to delay the start of the project?