Hi, I have previously send this question in, but the help did no cover hos to calculate these numbers in the date 1, up and down states, as I asked for help with. Can you help me and show how to calculate and understand how the teacher get these answers in the solution: 2.643 and 1.381.

This is the solution:

This is the questions and information we have been given:

For the remaining questions you need to hand in your results plus an explanation of how you came to these results. Q20. There is a two period world (with date zero, one, and two) with two assets as described below. You have an investment opportunity that can be undertaken today (date zero), at date one, or date two. Undertaking the investment opportunity costs 5 on the date at which it is undertaken. The PV of cash flows after the investment cost is paid (so on the date you undertake the investment) depend on when you undertake the investment opportunity and are given below. For example, if I would undertake the investment opportunity on date one in the up state then the PV (at date one) of future cash flows after investment would be 7.75 while on date one I would also need to pay the investment cost of 5. What is the PV of this real option and what is the optimal exercise strategy