CALCULATE NPV

-1000 sq. ft. of warehouse space needed for 1000 units of demand -Current demand -90,000 units per year -Binomial uncertainty: Demand can go up by 15% with p = 0.5 or down by 15% with 1 - D=0.5 -Lease price $1.00 per sqft per year -Spot market price $2.20 per sq. ft. per year Spot prices can go up by 10% with p = 0.5 or down by 10% with 1 - p = 0.5 Revenue = $1.5 per unit of demand -k - 0.1 1. Sign a flexible lease[70000-90000 sqft) with a minimum charge that allows variable usage of warehouse space up to a limit, with additional requirement from the spot market Calculate NPV -1000 sq. ft. of warehouse space needed for 1000 units of demand -Current demand -90,000 units per year -Binomial uncertainty: Demand can go up by 15% with p = 0.5 or down by 15% with 1 - D=0.5 -Lease price $1.00 per sqft per year -Spot market price $2.20 per sq. ft. per year Spot prices can go up by 10% with p = 0.5 or down by 10% with 1 - p = 0.5 Revenue = $1.5 per unit of demand -k - 0.1 1. Sign a flexible lease[70000-90000 sqft) with a minimum charge that allows variable usage of warehouse space up to a limit, with additional requirement from the spot market Calculate NPV