Bradford Services Inc. (BSI) is considering a project that has a cost of S10 million and an expected life of 3 years. There is a3 percent probability of good conditions, in which case the project will provide a cash flow of S9 million at the end of each year 3 years. There is a 40 percent probability of medium conditions, in which case the annual cash flows will be $4 million, and th is a 30 percent probability of bad conditions and a cash flow of-S1 million per year. BSI uses a 12 percent cost of capital to evaluate projects like this. a. Fin d the project's expected cash flows and NPV WACC 12% Condition Good Medium Bad Probability 30% 40% 30% CF x Prob 59 $4 S1 Expected CF- $2.70 $1.60 S0.30 $4.00 Time line of Expected CF S10 S0.35 $4.00 $4.00 $4.00 NPV= Without any real options, reject the project. It has a negative NPV and is quite risky