The University of Crookington wants to offer one of its courses online. It costs $45,000 to create the necessary infrastructure, and $15,000 to develop the digital content for the first course.

The University estimates that there is a 60% probability of the course being successful, in which case annual free cash flows to the firm of $8,000 can be expected for 10 years. Otherwise, annual free cash flows to the firm of only $5,000 can be expected over the same time period.

The University has a weighted average cost of capital of 15% and estimates that the online course would be as risky as its existing assets.

The University will observe the demand for the first online course over two years. If the course turns out to be successful, the University can offer another 3 courses online by investing $15,000 each for content development in two years and then earning $8,000 per year for 10 years. No additional investment in infrastructure will be required. What is the NPV of the project including this option?