Please help to answer the following question on International Finance. It is about real option in cross-border investment.

17.2 Grolsch management has gone ahead with the investment in problem 1'". The market has grown a. increasingly competitive, and nearly all of the brewery investments in Eastern Europe are losing money. To make matters worse, variable production costs of D20fbottle are higher than expected. According to local laws, employees cannot be laid off so long as the brewery is open, and Grolsch must either produce at capacity or close the brewery. A competitor is considering exiting the market. If this brewer does not abandon, price will remain Dlfbottle. If the brewer abandons, price will rise to D351'bottle. Assume Grolsch's abandonment decision does not influence competitor's decision, so price uncertainty is exogenous. The following facts apply to the abandonment decision: Cost of abandoning brewery 10 = D10,UOO,DDO; rises by 10% each year Current price of beer Pa = D15 per bottle in perpetuity Price of beer in one year P. = either D15 or D35 with equal probability Fixed production costs D10,000,000 per year FART FOUR Valuation and the Structure of Multinational Operations 40] Variable production cost D20 per bottle Expected production 1,000,0D bottles per year forever Discount rate i== 10% Draw a decision tree that depicts Grolsch's investment decision. b. Calculate the NPV of abandoning today as if it were a now-or-never altemative. C. Calculate the NPV (as oft = 0) of waiting one year before making a decision. d. Calculate the NPV of abandoning today, including all opportunity costs. EL Should Grolsch abandon this losing venture today