Consider the following case:

2. Growth options

Hack Wellington Co. is considering a three-year project that will require an initial investment of $30,000. It has estimated that the annual cash flows for the project under good conditions will be $70,000 and $11,000 under bad conditions. The firm believes that there is a 60% chance of good conditions and a 40% chance of bad conditions.

If the firm is using a weighted average cost of capital of 9.0000%, what will be the expected net present value (NPV) of the project?

$65,589

$74,334

$83,079

$87,452