Use the following information to answer questions 3 through 7. Scenario 2: The CFO of a company is looking at a forecast of a new product launch. Table 1, "Option 1: Product Launch", shows the forecasted undiscounted cash flows of this product launch under a Best, Normal, and Worst case scenario. Table 1: "Option 1: Product Launch" (In Millions) Year 0 Year 1 Year 2 Year 3 Best Case $ (50.00) $ 25.00 $ 30.00 $ 45.00 Normal Case $ (50.00) $ 21.00 $ 26.00 $ 39.00 Worst Case $ (50.00) $ 15.00 $ 20.00 $ 33.00 The CFO believes that there is a 20% chance that the Best case scenario will occur, a 60% chance that the Normal case scenario will occur, and a 20% chance that the Worst case scenario will occur. The CFO is worried that if the worst case scenario occurs the NPV of the project will be negative. With this in mind, the CFO requests that the marketing team create a new forecast of undiscounted cash flows assuming that the company spends an additional $5 million dollars of marketing in year 0 to help increase revenue in the event that the worst case scenario occurs. Table 2, "Option 2: Product Launch, Additional Marketing", shows the forecasted undiscounted cash flows of this product launch under each scenario with the $5M of additional marketing. Table 2: "Option 2: Product Launch, Additional Marketing" (In Millions) Year 0 Year 1 Year 2 Year 3 Best Case $ (55.00) $ 25.00 $ 30.00 $ 45.00 Normal Case $ (55.00) $ 22.34 $ 27.66 $ 41.50 Worst Case $ (55.00) $ 18.83 $ 25.10 $ 41.42 The company's Weighted Average Cost of Capital (WACC) or discount rate is 16%. 1. Which Option would you choose if you want the option with the highest NPV? Option 1: "Product Launch" Option 2: "Product Launch with Market" 2. Based on your selection from question 3, what is the Expected NPV of this option? For this calculation just determine the NPV of the option that you selected and not the NPV of your decision to choose one option over the other? Since the numbers given are in dollars and not millions, enter your answer to the nearest cent without the dollar sign. Example $22.587M enter as 22.59. 3. Which option do you choose if you want the option with the lowest standard deviation? **Hint, when calculating standard deviation, do not use the standard deviation function key on your calculator or the STDEV.P function in Excel to calculate the standard deviation for this question as these command functions assume an equal probability of all events occurring. As you have noticed in this scenario there are unequal probabilities of all of the events occurring. Option 1: "Product "Launch" Option 2: "Product Launch with Marketing" 4. Based on your selection from question 5 what is the standard deviation of the NPV of this option? Since the numbers given are in dollars and not millions, enter your answer to the nearest whole cent without the dollar or plus or minus sign. Example standard deviation of + or - $9.587M, enter as 9.59. 5. Which Option do you choose? Choose Option 1, has it has the highest NPV and the highest standard deviation indicating lowest amount of risk. Choose Option 1, has it has the highest NPV and lower standard deviation indicating lower amount of risk. Choose Option 2, has it has relatively the same NPV but substatailly lower standard deviation indicating significantly lower risk Choose Option 2, has it was a slightly higher NPV and higher standard deviation indicating lower risk