c. Now assume that the project cannot be shut down. However, expertise gained by taking it on will lead to an opportunity at the end of Year 3 to undertake a venture that would have the same cost as the original project, and the new project's cash flows would follow whichever branch resulted for the original project. In other words, there would be a second $10 million cost at the end of Year 3, and then cash flows of either $9 million, $4 million, or -$1million for the following 3 years. Use decision tree analysis to estimate the value of the project, including the opportunity to implement the new project in Year 3. Assume the $10 million cost at Year 3 is known with certainty and should be discounted at the risk-free rate of 6 percent. Hint: do one decision tree for the operating cash flows and one for the cost of the project, then sum their NPVs. wacc=12% risk free rate=6%

PLEASE DO NOT SOLVE

Total NPV NVPV of Future Operating CF ples NPV of Future Year 3 cost of implenting additional project) = Total NPV NVPV of Future Operating CF ples NPV of Future Year 3 cost of implenting additional project) =