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The NPV of a new video game, Tech 1, is - $1 million after discounting all expected cash flows. However, an add on video game,

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The NPV of a new video game, Tech 1, is - $1 million after discounting all expected cash flows. However, an add on video game, Tech 2 is a possible follow-on opportunity in three years. In three years it will cost $10 million to start Tech 2, which will produce $12 million of cash flow in year 3 with a volatility of 20%. The annual interest rate is 8 percent and equals the risk-free rate. What is new NPV estimate? $0.26 million $2.20 million $1.26 million $1.201 million The NPV of a new video game, Tech 1, is - $1 million after discounting all expected cash flows. However, an add on video game, Tech 2 is a possible follow-on opportunity in three years. In three years it will cost $10 million to start Tech 2, which will produce $12 million of cash flow in year 3 with a volatility of 20%. The annual interest rate is 8 percent and equals the risk-free rate. What is new NPV estimate? $0.26 million $2.20 million $1.26 million $1.201 million

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