eBook Problem Walk-Through Investment Timing Option: Decision-Tree Analysis Kim Hotels is interested in developing a new hotel in Seoul. The company estimates that the hotel would require an initial investment of $20 million, Kim expects the hotel will produce positive cash flows of $3.2 million a year at the end of each of the next 20 years. The project's cost of capital is 15%. 3. What is the project's net present value? Negative value, if any, should be indicated by a minus sign. Enter your answers in milions. For example, an answer of $10,550,000 should be entered as 10.55. Do not round intermediate calculations. Round your answer to two decimal places milion b. Kim expects the cash flows to be $3.2 million a year, but is recognizes that the cash flows could actually be much higher or lower, depending on whether the Korean government imposes a large hotel tax. One year from now, Kim will know whether the tax will be imposed. There is a 50% chance that the tax will be imposed, in which case the yearly cash flows will be only $2.2 milion. At the same time, there is a 50% chance that the tax will not be imposed, in which case the yearly cash flows will be 54.2 million, Kim is deciding whether to proceed with the hotel today or to wait a year to find out whether the tax will be imposed. If Kim waits a year, the initial investment will remain at $20 million. Assume that all cash flows are discounted at 15%. Use decision-tree analysis to determine whether Kim should proceed with the project today or wait a year before deciding Check My Work (emaining) Olen B 9 tv D