• Suppose you are trying to decide whether you want to undertake a R&D project.
• the initial investment is $50 million.
• The upcoming costs are uncertain and there are three possibilities equally likely:
• Low cost (of $70 million)
• Medium cost (of $120 million)
• High cost (of $200 million)
• The expected revenue is going to be $160 million for a very long time.
• Suppose the initial investment allows you to learn if the costs are high medium or low and then invest only if costs are medium or low. Find the NPV of the project and decide if you should invest the $50 million today!

A. NPV = $14.2 million, invest.

B. NPV = -$6.6 million, do not invest.

C. NPV = $10.4 million, invest.

D. NPV = $6.6 million, invest.