Suppose Exxon Mobil wants to launch a big project to invest in a process to do hydraulic fracturing (fracking) using much less water than it does now. This will require an initial investment of $5 billion. The project is expected to bring in $700 million per year in net cash flow for the next 9 years. The cost of capital is 8%. After one year, Exxon Mobil could sell the equipment for $2 billion net of taxes. If the project is a success, cash flow estimates will jump to $2 billion per year for the rest of the project. There is a 35% probability of success. 15. The present value of expected cash flows after the first year is? (a) $4,023 million $4,373 million $4,049 million $3,725 million