operations. To do so it will need to purchase land that its geologists believe is tich in gold. Strikit-Rich's management believes that the expansion will allow it to mine and sell an additional 2,000 troy ounces of gold per year. The expansion, including the cost of the land, will cost $600,000. The current price of gold bullion is $425 per ounce and extraction costs are $375 per ounce. The firm's cost of capital is 10 percent. Strike-it-Rich's management is, however, concerned with the possibility that large sales of gold reserves by Russia and the United Kingdom will drive the price of gold down to $390 for the foreseeable future, with probability 0.60. On the other hand, management believes there is some possibility that the world will soon return to a gold reserve international monetary system. In the latter event, the price of gold would increase to at least $460 per ounce, with probability 0.40. The course of the future price of gold bullion should become clear within a year. Strik-it-Rich can postpone the expansion for a year by buying a purchase option on the land for $50,000. a. Compute the Expected NPV of the project. (Think of the gold mine as a perpetuity) b. Compute the project values next year for the two possible gold prices. Is buying the purcha option on the land and postponing the decision to invest for a year a good idea