Singh Development Co is deciding whether to proceed with Project X The cost would be $8 million in Year 0 There is a 50 chance that X would be hugely successful and would generate annual after tax cash flows of $5 million per year during Years 1, 2, and 3 However, there is a 50 chance that X would be less successful and would generate only $1 million per year for the 3 years If Project X is hugely successful, it would open the door to another investment, Project Y, which would require an outlay of $9 million at the end of Year 2 Project Y would then be sold to another company at a price of $18 million at the end of Year 3 Singh's WACC is 9 If the company does not consider real options, what is Project X's expected NPV Enter your answers in millions For example, an answer of $10,550,000 should be entered as 10 55 Negative value, if any, should be indicated by a minus sign Do not round intermediate calculations Round your answer to three decimal places $million What is X's expected NPV with the growth option Enter your answers in millions For example, an answer of $10,550,000 should be entered as 10 55 Negative value, if any, should be indicated by a minus sign Do not round intermediate calculations Round your answer to three decimal places $million What is the value of the growth option Enter your answers in millions For example, an answer of $10,550,000 should be entered as 10 55 Negative value, if any, should be indicated by a minus sign Do not round intermediate calculations Round your answer to three decimal places $million

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Singh Development Co. is deciding whether to proceed with Project X. The cost would be $8 million in Year 0. There is a 50% chance

Singh Development Co. is deciding whether to proceed with Project X. The cost would be $8 million in Year 0. There is a 50% chance that X would be hugely successful and would generate annual after-tax cash flows of $5 million per year during Years 1, 2, and 3. However, there is a 50% chance that X would be less successful and would generate only $1 million per year for the 3 years. If Project X is hugely successful, it would open the door to another investment, Project Y, which would require an outlay of $9 million at the end of Year 2. Project Y would then be sold to another company at a price of $18 million at the end of Year 3. Singh's WACC is 9%.

If the company does not consider real options, what is Project X's expected NPV? Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55. Negative value, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to three decimal places.
$million
What is X's expected NPV with the growth option? Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55. Negative value, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to three decimal places.
$million
What is the value of the growth option? Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55. Negative value, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to three decimal places.
$million