The Real Option Inc. is considering a new project. It believes that each year it would be able to sell 15 units at a $303,000 per-unit after-tax profit (i.e., per-unit operating cash flow) for the next five years. A $14.9 million initial investment will be required at the beginning of the project. The appropriate discount rate is 16 percent. a. Calculate the base-case NPV of this project. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89.) b. Now, let's make thing a bit more "interesting". First, this project may turn out unsuccessful, in which case after the first year, the project will end and all fixed assets get sold and bring the company after-tax salvage value of $10.8 million. Second, after the first year (i.e., starting year two), the expected number of sold units will be revised up to 20 units per year or down to O units per year (which means that the project turned out unsuccessful), and these two events can happen with equal probability. Calculate the revised NPV. In other words, calculate the expected NPV of this project with the embedded option to shut it down after the first year in case of failure. (Do not round your intermediate calculations. Enter your final answer in dollars, not millions of dollars, and round to 2 decimal places, e.g., 1,234,567.89.) a. Base-case NPV b. Revised NPV The Real Option Inc. is considering a new project. It believes that each year it would be able to sell 15 units at a $303,000 per-unit after-tax profit (i.e., per-unit operating cash flow) for the next five years. A $14.9 million initial investment will be required at the beginning of the project. The appropriate discount rate is 16 percent. a. Calculate the base-case NPV of this project. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89.) b. Now, let's make thing a bit more "interesting". First, this project may turn out unsuccessful, in which case after the first year, the project will end and all fixed assets get sold and bring the company after-tax salvage value of $10.8 million. Second, after the first year (i.e., starting year two), the expected number of sold units will be revised up to 20 units per year or down to O units per year (which means that the project turned out unsuccessful), and these two events can happen with equal probability. Calculate the revised NPV. In other words, calculate the expected NPV of this project with the embedded option to shut it down after the first year in case of failure. (Do not round your intermediate calculations. Enter your final answer in dollars, not millions of dollars, and round to 2 decimal places, e.g., 1,234,567.89.) a. Base-case NPV b. Revised NPV