Option analysis involves gathering significant amounts of information, synthesizing the data, and using the data in models applied in option analysis.

Demo You Inc. is considering a project for a new cloud$-$based online storage system for companies and individuals to back up their data. The cost of the project is $$55$ million, but the future cash flows depend on how this new cloud$-$based online storage will compete with existing companies that offer online data backup.

The company believes that this project has a strong selling feature but is uncertain that it would earn cash flows as projected. The team proposing this project has come up with the following data:

$\backslash$table$[[$Demand$,$Probability,Annual Cash Flow$],[$High$,0\mathrm{.}40,$$$50$ million$],[$Average$,0\mathrm{.}40,$$$35$ million$],[$Low$,0\mathrm{.}20,$$$15$ million$],[$Project$\text{'}$s cost of capital,,$9\mathrm{.}00\%$