Mapple, Inc., intends to introduce a new uPhone that requires an initial investment of $12 million.Mapple expects that annual after-tax operating cash flows will amount to $2.25 million at the end of each of the next ten years.Mapple uses a 12% discount rate to evaluate new investment opportunities.

Required:(Show your work)

1. What is the NPV of the new Uphone opportunity?
2. After one year, the estimate of the nine remaining annual cash flows will be revised either upward to $4.125 million or downward to $517,500. Each revision has an equal probability of occurring. What is the NPV of the new opportunity now?
3. Assume the same facts as b but that the uPhone project could be sold for $4.65 million at t = 1.Should Mapple sell the uPhone project at t = 1?
4. What is the NPV of the new opportunity under the assumptions of part c now?