excel not needed

8. A firm can manufacture its products in a plant that initially employs gas as its energy input but could switch to coal if coal became sufficiently cheap. The firms revenues will be $400 million today and $400 million in one year. Annual costs are $91 million plus the cost of energy, which will be $108 million so long as the firm stays with gas or 1 million times the price of coal (per ton) if the firm switches to coal. Assume that there are no costs to switch to coal but that the firm cannot switch back to gas later. Switching can occur immediately or at year 1, and the decision can depend on the price of coal. The price of coal is currently $95, and it can change over the next year as follows:
													135
												95
													88
												The risk-free rate is 8% per year. Investors who invest in coal (assume that some such investors exist) must spend 5% of the beginning-of-year price of coal to store the coal, but the storage cost is paid at the end of each year.
A. When and under what circumstances should the firm switch from gas to coal?
B. What is the value of the plant immediately prior to todays cash flows?