iii Michael is interested in building a new hotel in Limerick, Ireland. His company estimates that the hotel would require an initial investment of $16 million, would produce positive cash flows of $4 million a year at the end of each of the next 20 years and can be salvaged (after-tax) for $24 million at t=20. The company recognizes that the cash flows could, in fact, be much higher or lower, depending on whether that area becomes a popular tourist area. It is believed that at the end of three years, a 30 percent chance exists that tourism will NOT be spreading in that direction and yearly cash flows will be only $3 million for 20 years with an after-tax salvage value of $19 million, and an 70 percent chance exists that tourism WILL be heading that way and the yearly cash flows will be $7 million for 20 years with an after-tax salvage value of $26 million. If the firm waits three years, the initial investment will be $20 million. The project's cost of capital is 13 percent. Should the firm proceed with the project today or should it wait three years before deciding? (Round to the nearest dollar.) c. a. Wait 3 years; the NPV of building today is $3,927,401 worse than the NPV for waiting three years. b. Wait 3 years, the NPV of building today is $3,687,790 worse than the NPV for waiting three years. Wait 3 years; the NPV of building today is $1,631,999 worse than the NPV for waiting three years d. Build it now since the NPV of building today is $3,927,401 better than the NPV for waiting three years. Build it now since the NPV of building today is $2,258,879 better than the NPV for waiting three years. e