PLEASE GO THROUGH EACH STEP TO SOLVE.

MacDonald Soup Company is developing a revolutionary new product. Having just taken over managing the project initiation process for Mac's from the previous project analyst, Chili Palmer is trying to evaluate the project's potential given its uncertain cash flows. Research and development is expected to take 4 years at an annual cost of $18.354M. Mac's managers estimate that there is a 63% likelihood that the research and development project will succeed. One year market development costs associated with the new product, incurred in year 5, are estimated at $3.672M and Mac's market analysts estimate successful market development with a 0.93 probability. Based on an analysis of past product introductions, Chili believes that Mac's will realize annual revenue of $59.278M for 8 years beginning in year 5 if market development succeeds. However, if market development is unsuccessful, Chili estimates annual revenue at $2.264M for 8 years.

Chili would like you to explicitly incorporate the uncertainty estimates while developing the following project metrics, i.e. calculate exected values for all of the following (assume all cash flows occur at the end of the specified year and calculate all values to three decimal places). Where appropriate, assume a discount rate of 0.15.

Cumulative Revenue as of year 4:

Cumulative Cash Flow as of year 4:

Cumulative Discounted Revenue as of year 3:

ECV:

Payback Period (enter -1 If No Payback):

Total Revenue: