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Chrustuba Inc. is evaluating a new project with an after - tax cost of $ 8 . 8 million at t = 0 . There

Chrustuba Inc. is evaluating a new project with an after-tax cost of $8.8 million at t =0. There is a 50% chance that the project would be highly successful and generate annual after-tax cash flows of $6.4 million during Years 1,2, and 3. However, there is a 50% chance that it would be less successful and would generate annual after-tax flows of only $1 million for each of the 3 years. If the project is highly successful, it would open the door for another after-tax investment of $10 million at the end of Year 2, and this new investment could be sold for $20 million after taxes at the end of Year 3. Assuming a WACC of 9.5%, what is the project's expected NPV (in thousands) after taking into account this growth option? Do not round intermediate calculations.
a. $3,536
b. $3,929
c. $4,519
d. $4,322
e. $3,340

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