Wineries in Italy are finding that warmer temperatures are causing their grapes to ripen too quickly due to climate change. In order for grapes to make great wine, they need to finish ripening in the early fall with warm days and cool nights, but recently this hasn't been happening. Also, new grape vines don't start producing good wine until they are 5 years old and they last until about 16 years from planting. A grape vineyard will have to plant a new crop of vines in part of their field this year and there are 3 varieties with different characteristics. which grape variety would you recommend if their cost of capital is 15%? Variety XX01 XX02 XX04 $ $ $ $ Initial Cost 28,000 32,000 36,000 38,500 Annual Value once $ $ producing in cool weather 9,350 9,250 9,200 9,100 (20% chance) Annual Value once $ $ producing in mild weather 9,200 9,700 10,000 12,200 (40% chance) Annual Value once $ $ $ producing in warm 9,000 11,000 13,000 13,400 weather (40% chance) XX01 XX02 XX04 Wineries in Italy are finding that warmer temperatures are causing their grapes to ripen too quickly due to climate change. In order for grapes to make great wine, they need to finish ripening in the early fall with warm days and cool nights, but recently this hasn't been happening. Also, new grape vines don't start producing good wine until they are 5 years old and they last until about 16 years from planting. A grape vineyard will have to plant a new crop of vines in part of their field this year and there are 3 varieties with different characteristics. which grape variety would you recommend if their cost of capital is 15%? Variety XX01 XX02 XX04 $ $ $ $ Initial Cost 28,000 32,000 36,000 38,500 Annual Value once $ $ producing in cool weather 9,350 9,250 9,200 9,100 (20% chance) Annual Value once $ $ producing in mild weather 9,200 9,700 10,000 12,200 (40% chance) Annual Value once $ $ $ producing in warm 9,000 11,000 13,000 13,400 weather (40% chance) XX01 XX02 XX04