Assumptions
1.	The decision to invest in the Mark II must be made after three years, in 1985.
2.	The Mark II has an investment requirement of $910 million, which is taken as fixed.
3.	Forecasted cash inflows of the Mark II have a present value in 1985 of $817 million and $473 million (817 / 1.23 = 473) in 1982.
4.	The future value of the Mark II cash flows is highly uncertain. This value evolves as a stock price does with a standard deviation of 37% per year.
5.	The annual interest rate is 12%.
Interpretation
The opportunity to invest in the Mark II is a three-year call option on an asset worth $473 million with an exercise price of $910 million.

How does the value of the option to invest in the Mark II in 1982 change if: a. The investment required for the Mark II is $810 million (vs. $910 million)? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Option Value:

b. The present value of the Mark II in 1982 is $510 million (vs. $473 million)? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Option Value:

c. The standard deviation of the Mark II's present value is only 22% (vs. 37%)? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Option Value: