Question 3 Consider the information in Table 4 about an investment opportunity that can be deferred for one year: Expected cash flow (CF) year 1 g perpetuity growth rate of CF Table 4 105 million 1.8% 10% 1,380 million 15% 1.0% 6% k-cost of capital K-investment cost -standard deviation of CF r-risk-free rate - opportunity cost To answer the following questions, make plausible assumptions if necessary. In case you prefer, standard characters can be used (e.g. s rather than , capital_sigma rather than . a. What is the value of this investment opportunity using the Black-Scholes (B-S) formula for a European call option? Explain your answer. For your computations, use as inputs for the cumulative probability from the normal distribution N(d) = 0.2244 and N(d2) = 0.1821. Present your result rounded to one decimal place. [12.5 marks] b. Consider the following statement with respect to the investment opportunity under analysis: "The option value associated with the investment opportunity is positive. Therefore the investment opportunity should be accepted". Do you agree with this statement? Explain your answer. [12.5 marks]