You and your brothers have just had a great idea for a new product, and you would like to try to bring it to le You would need to immediatefy spend \$16,000. Your pro-forma calculations show that an estimated $2,000 would be consing in each year in after-tax profits for the nexe 12 years. You believe 8% is appropriate to use for the discount rate. Unfortunately, according to these numbers the NPV of this pilot profect is negative fuchich can be verified. Fortunately. though. you and youir brothers completely disagree on how much profit may be coming in each year. The votatisty of these arnual profits is 36%6. What this means is that if foe this pilot project the profits turn out much higher, then you all agree that expanding this buincss mipht make a lot of sense. The expansion would involve adding 18 more of such products to your production line and this would take place when the first 12 -vosr plot product proiect is over. - In general, a higher volatility (see given) makes it more worth it to do the peoject expansion. - In order to calculate the value of the possibility of this expansion ant can use the Black: Scholes formula. In this formuta. the equivalent of the "current stock price' equals. , which is nothing but HINT: You will ni it are given in this pooblem