Please find the expected NPV, standard deviation, CV and value of the option.

The break-even sales levels for Plans A and B are not shown in the table, but it is 50,000 units or $100,0001 461 Chapter 13 Capital Structure and Leverage FIGURE 13.2 Plant A illustration of Operating Leverage Plan Sales Revenues Revenues and Costs (thousands of dollars Operating Profit ( (EBIT 200 Revenues and Costs thousands of dollars) Sales Revenues Operating Profit ET 2001 160 160 Operating Loss Z Operating Loss 120 120 Total Operating Costs Break Even Point (EBIT -09 Total Operating Costs Break-Even Point (EBIT-01 Fred Costs 80 80 40 Fixed Costs 40 0 20 40 60 O 20 40 60 80 100 120 Sales (thousands of units) 80 100 120 Sales (thousands of units) Plan A Price $ 2.00 Variable costs $ 1.50 Fixed costs $ 25,000 Invested capital $200,000 Tax rate 25% Plan B $ 2.00 $ 1.00 $ 70,000 $200,000 25% Demand Poor Normal Plan A Plan B Operating Operating Units Dollar Operating Profit Operating Profit Probability Sold Sales Costs (EBIT) EBIT/1 -T) ROIC Costs (EBIT) EBIT(1-T) ROIC 0.05 OS 0 $ 25,000 ($25,000) ($18,750) 19.38)% $ 70,000 ($ 70,000) (552,500) (26.25746 0.20 40,000 80,000 85,000 15.000) (3,750) (1.881 110,000 (30,000) (22,500) (11.25) 0.50 100,000 200,000 175,000 25,000 18,750 9.38 170.000 30,000 22,500 11.25 0.20 160,000 320,000 265,000 55,000 41.250 20.63 230,000 90,000 67,500 33.75 0.05 200,000 400,000 325,000 75,000 56.250 28.13 270,000 130,000 97,500 48.75 100,000 $200,000 $175,000 $ 25,000 $ 18,750 9.38% $ 170,000 $ 30,000 $22,500 11.25% $ 24,698 9.26% $ 49,396 18.52% 0.99 0.99 1.65 1.65 Good Espected value Standard deviation Coeficient of variation piny had outstanding debt. Operating costs - Variable costs + Fixed costs Because the company has no debt, Net Income - EBIT(1 - T) and ROE - ROIC, but these equations would no longer hold once the com A and 70,000 units or The expected values standard deviations, and coefficients of variation were found using procedures discussed in Chapter 8. $140,000 for B