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 $990 million, which is taken as fixed.
3.	Forecasted cash inflows of the Mark II have a present value in 1985 of $897 million and $519 million (897 / 1.23 = 519) 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 42% per year.
5.	The annual interest rate is 9%.
Interpretation
The opportunity to invest in the Mark II is a three-year call option on an asset worth $519 million with an exercise price of $990 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 $890 million (vs. $990 million)?

b. The present value of the Mark II in 1982 is $590 million (vs. $519 million)?

c. The standard deviation of the Mark II's present value is only 27% (vs. 42%)?

(Do not round intermediate calculations. Round your answer to 2 decimal places.)