Homework: Homework Set 4 Question 19, P11-32 (si. HW Score: 19.17%, 9.58 of 50 points Par. 14 Points: 0 of 2 Save Real options and the strategie NPV Jenny Rene, the CFO of Agor Products. Inc., has just completed an evaluation of a proposed capital expenditure for equipment that would expand the film's manufacturing capacity. Using the traditional NPV methocology, she found the project uraceptable banausa: NPV1dional--S2,0850 Before recommending rejection of the proposed project, she has decided to asse88 whether there might be real cplions embedded in the fim's cash flows. Her evaluation uncovered three options and their probablity. 1 at the of OVO 2. Growthr the projected outcomes occurred, an opportunity to expard the firm's product offerings further would occur at the end of 4 years. Exercise of this option is estiraled to add $3,450 to the projecte NPV. Ondor 3: Ting Certain phases of the proposed project could be delayed it market and competitive conditions caused the firm's forecast revenues to develop more slowly than planned. Such a delay in implementation at that point has an NPV of $10,200. Jerry estimated that there was a 30% chance that the abandonment option would need to be exercised, a 35% chance that the growth oulion would be exercised, and only a 10% chance that the implementation of certain phases of the project would affect timing. a. Use the infomation provided to calculate the strategic NPV, NPV strategic for Abar Products proposed equipment expenditure. 1. Judging on the basis your findings in part (al, what action should Jenny recommend to management with regard to the proposed aguloment expenditure? c. In general, how does this problem demonstrate the importance of considering real options when making canital budgeting decisions? a. The value of the real options is $ (Round to the nearest colar