project A will have an initial cost of $65 million, and expected annual cash flows of $3.50 million per year starting in year one and continuing forever. The risk-free rate and appropriate discount rate for the project is 5%. What would be the value of the project if it has no options? You realize that the expected cash flow actually comes from a 20% chance of earning $1 million per year starting in year 1, and a 70% chance of earning $5 million per year starting in year 1. In one year, you will be able to expand the project if you would like to. The cost of this will be $9 million paid in year 1, and the cash flows will increase beginning in year two and remain at the new level through the end of the project, if you choose to expand. This change will have the biggest impact in a good economy when demand is high (when earning $5 million per year) ,and you will be able to increase your cash inflows (beginning with the year two cash flow) by 40%. when your economy is bad ( earning $1 million per year), you will be able to increase your cash flows by 20% of what it previously was. What would be the value today of this option to expand in one year?