Refer to Narrative 2 Find the dynamic NPV of of performing the $2 million feasibility study $589,852$1,669,888$2,740,931$3,424,397 Refer to Narrative 2 Ignoring the cost of the study, estimate the NPV of weak product demand in year 2: - \$20.1 million -\$16.98 million $1.35 million $4.5 million The Manufacturing Company, Inc. (MC) is considering performing a feasibility study for a new product available from one of its foreign suppliers. Because MC will have to make an investment of $50 million in order to obtain exclusive U.S. marketing rights to the product, the firm is contemplating performing a feasibility study of the product's market potential. The cost of the study, which will take two years to complete, is an upfront fee of $2 million. Included in this cost is an exclusive option that gives MC two years in which to make the decision to pay the foreign supplier the $50 million. MC's preliminary estimates indicate that there is a: - 50 percent chance of strong product demand, which will result in cash inflows of $13 million per year for 8 years. The first cash inflow occurs in year 3 . - 20 percent chance of moderate product demand, which will result in cash inflows of $12 million per year for 8 years. The first cash inflow occurs in year 3 . - 30 percent chance of weak demand, which will result in cash inflows of $7 million per year for 8 years. The first cash inflow occurs in year 3. After MC sees the results of the feasibility study, it will decide whether to invest the $50 million or not. MC's cost of capital applicable to the proposed new product decision is 13.5 percent. Ignoring the cost of the \$2 million study, estimate the NPV of strong product demand in year 2: $8.6 million $11.3 million $12.4 million Refer to Narrative 2 Find the value of the option to abandon $2,493,126$3,953,312$1,687,214$845,654 Refer to Narrative 2 Ignoring the cost of the study, estimate the NPV of moderate product demand in year 2: $1.45 million $4.56 million $6.61 million $8.52 million Find the static NPV of performing the $2 million feasibility study $436,852$415,985$528,915$256,489