JTM really liked your work on the option pricing of the gates, so they ask you to look at their 3-phase expansion at their home airport. The three phases are:

1. upon purchase of the new gates, start a marketing program to promote JTM's routes to the East Coast, West Coast, and the Caribbean. It all goes well and the market is receptive, they will go on to phase 2

2. phase 2 has JTM invest in new routes to the three sets of destinations listed. If at any time, JTM finds that this is not going to work, they will pull the plug on phase 2 and scratch the project

3. phase 3 has JTM start the new routes to the destinations listed. If things don't go well on any of the three destinations, they will pull the plug on phase 3 and scratch that destination out

After much work with other departments, you generate enough data to calculate the NPV of the 3-phase expansion. Before you have a chance to save all your work, there is a power spike in the building and you lose part of your work. You have to go back and complete it so you can present it to your manager. Please use the template to complete problem 3

Chrome - Mail - Collier, Chelsea - Outlook - outlook.office365.com/mail/deeplink Excel Week 3 template-1.xls Edit and reply Download # Show email Excel Week 3 template-1 Comments Print O Data P Find e A B C D E F I J K L M N R S G H JTM Airlines Airport Expansion Start Phase I Phase II Phase III Success 85% PV of Revenues 400 Costs 160 Net 240 Probability 21.7% Expected Value 52.0 35 East Coast 30% 50 Failure 15% 135 (135) 3.8% (5.2) 10 200 Success 80% 35 West Coast 30% Failure 20% 10 Success 85% Success 120 70% 35 Caribbean 25% Prob. 3 401 HV Prob. 1 Prob. 2 Help Improve Office 10:25 Chrome - Mail - Collier, Chelsea - Outlook - outlook.office365.com/mail/deeplink Excel Week 3 template-1.xls Edit and reply Download # Show email Excel Week 3 template-1 Comments Print O Data P Find e A B C D E F I J K L M N R S G H JTM Airlines Airport Expansion Start Phase I Phase II Phase III Success 85% PV of Revenues 400 Costs 160 Net 240 Probability 21.7% Expected Value 52.0 35 East Coast 30% 50 Failure 15% 135 (135) 3.8% (5.2) 10 200 Success 80% 35 West Coast 30% Failure 20% 10 Success 85% Success 120 70% 35 Caribbean 25% Prob. 3 401 HV Prob. 1 Prob. 2 Help Improve Office 10:25