Calculate the net present value of each option. Assume a 12% discount rate.

Y (b) Your answer Is partially correct. Try again. Calculate the net present value of each option. Msume a 12% dlscount rate. Net present value Option 1 .. 900000000 E3 Option 2 100004BB.00 Option 3 .. 569311000 Case Question 9-31 \"Maybe I should have stuck wlth teaching high school art. No matter what I try, I can't seem to turn that Roanoke plant around.\" That's how the meetlng between Warren Wingo, CEO of clothing manufacturer Wingo Deslgns, and Angle Tlllery, vice president of corporate lendlng at First National Bank, ended. Wlngo and Tlllery had just concluded that the Roanoke plant was draining corporate cash ow and income, and should be closed on December 31, 2013. When he returned to his ofce, Wlngo summoned corporate controller Ron Wright to tell him the bad news. \"Ron, I wish there were some way to turn this situatlon around. We've had so many bad things happen latelythe re in Lexington, the strike in Pulaskl, and now this. Why dldn't I stay at Cave Spring ngh?" "Warren, it may not be as bad as it seems,"' Ron replied. \"Let's put our heads together and do some investigating. We've got some great folks working here, and I bet if we asked them to think about it, they could come up with some options.\" With that encouragement, Warren sent Ron out to find some way of disposing of the Roanoke facility. Early Monday morning, Ron ran into Warren's ofce waving a legal pad. \"We've done it, Warren. We've got three good optlons for the Roanoke plant. One of them even has us keeping the plant.\" Warren listened intently as Ron laid out the three optlons his staff had developed: Option 1 Sell the plant immediateiy to Tinsley Togs for $9,000,000. Option 2 Lease the plant for four years to Star City Mills (one of Wingo's suppliers). Under the lease terms, Star Clty would pay Wingo $2,400,000 in rent each year and would gnant Wingo a 10% discount on fabrlc purchased by another of its plants. The fabric normally sells for $2 per yard, and Wingo expects to purchase 2,320,000 yards of It each year. Star City would cover all the plant's ownership costs, including property taxa. At the end of the lease, Wingo would sell the plant for $2,000,000. Option 3 Use the plant for four years to make souvenir 2022 Winter Olympic jackets. Fixed overhead, before equlpment upgrads, is estlmated at $200,000 a year. The jackets are expected to have a varlable :03 of $33 per unit and to sell for $42 each. Estimated unit les are as follows; annual production would equal sales. Year Jacket Sales In Unit: 2019 200,000 2020 300,000 2021 400,000 2022 100,000 To manufacture the jackets, some of the plant's equipment would have to be replaced at an immedlate cost of $1,500,000. The equlpment would have a useful llfe of four years. Because of the upgraded equipment, Wlngo could sell the plant for $3,000,000 at the end of four years. Timing Tear D "rear 1 Year 2 Year 3 Year -'-'|- uptiun 1 H I\" E- H I\" H I\" E I\" E I\" Amuu rIt Dpnn 1 l I\" H I\" 23F4D H I\" EBF4DDD H I\" 25F4 H I\" 45F4 Dptlnn 3 H -15 H l H 25 E Ed E EFDUIIJD