Growth Option: Kidco Corporation designs and manufactures products aimed at the preteen market. Most of its products have a very short life, given the rapidly changing tastes of preteens. Kidco is now considering a project that will cost $30 million. Management believes there is a 25% chance that the project will "take off" and generate operating cash flows of $34 million in each of the next 2 years, after which preteen tastes will change and the project will be terminated. There is a 50% chance of average demand, in which case cash flows will be $20 million annually for 2 years. Finally, there is a 25% chance that preteens won't like the product at all, and it will generate cash flows of only $2 million per year. The estimated cost of capital for the project is 14%. a. What is the expected NPV, SD, and CV of the project without the growth option?

Growth Option: Kidco Corporation designs and manufactures products aimed at the preteen market. Most of its products have a very short life, given the rapidly changing tastes of preteens. Kidco is now considering a project that will cost $30 million. Management believes there is a 25% chance that the project will "take off' and generate operating cash flows of \$34 million in each of the next 2 years, after which preteen tastes will change and the project will be terminated. There is a 50% chance of average demand, in which case cash flows will be $20 million annually for 2 years. Finally, there is a 25% chance that preteens won't like the product at all, and it will generate cash flows of only \$2 million per year. The estimated cost of capital for the project is 14%. a. What is the expected NPV, SD, and CV of the project without the growth option