CALCULATE NPV

Question 1 Answer 1 question2 Answer 2 Question 3 Answer 3 -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-p0.5 -Lease price = $1.00 per sq. ft. 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 sq ft) with a minimum charge that allows variable usage of warehouse space up to a limit, with additional requirement from the spot market Calculate NPV Question 1 Answer 1 question2 Answer 2 Question 3 Answer 3 -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-p0.5 -Lease price = $1.00 per sq. ft. 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 sq ft) with a minimum charge that allows variable usage of warehouse space up to a limit, with additional requirement from the spot market Calculate NPV