Joe Avery recently graduated from college and has an idea for a juice shop using only organic and locally-sourced ingredients. He has saved just enough money to cover the initial investment required to open the shop, $56,000. Using his corporate finance training, he estimates that the free cash flow from the shop will be $14,000 per year, forever. Investments with similar risk deliver a rate of return of 10%. IB Attempt 1/3 for 10 pts. Part 1 What is the NPV of the project? 0+ decimals Submit Part 2 IB Attempt 1/3 for 10 pts. In fact, the annual cash flow of $14,000 is an expected value: there is a 50% chance that annual cash flow will be $35,000 and a 50% chance that it will be -$7,000. Because of a very restrictive leasing contract, he cannot close down the shop even if there is no demand. What is the expected NPV of the project? 0+ decimals Submit Part 3 18 Attempt 1/3 for 10 pts. Fortunately, Joe's rich relatives are willing to provide him with enough capital to open another 5 shops after the first year if there is a lot of demand. What is the true NPV of the project? 0+ decimals Submit 1 Attempt 1/3 for 10 pts. Part 4 What is the value of the option to expand? 0+ decimals Submit Joe Avery recently graduated from college and has an idea for a juice shop using only organic and locally-sourced ingredients. He has saved just enough money to cover the initial investment required to open the shop, $56,000. Using his corporate finance training, he estimates that the free cash flow from the shop will be $14,000 per year, forever. Investments with similar risk deliver a rate of return of 10%. IB Attempt 1/3 for 10 pts. Part 1 What is the NPV of the project? 0+ decimals Submit Part 2 IB Attempt 1/3 for 10 pts. In fact, the annual cash flow of $14,000 is an expected value: there is a 50% chance that annual cash flow will be $35,000 and a 50% chance that it will be -$7,000. Because of a very restrictive leasing contract, he cannot close down the shop even if there is no demand. What is the expected NPV of the project? 0+ decimals Submit Part 3 18 Attempt 1/3 for 10 pts. Fortunately, Joe's rich relatives are willing to provide him with enough capital to open another 5 shops after the first year if there is a lot of demand. What is the true NPV of the project? 0+ decimals Submit 1 Attempt 1/3 for 10 pts. Part 4 What is the value of the option to expand? 0+ decimals Submit