Zion AviationRates:Discount rate Option Pricing:Riskfree rate PV of Cap. ExYrs Scenario: No Real Options Maturity Start PV of NCFCash from Operations Risk free rateminus: Capital Expenditures Volatility Net Cash Flow NCF BS calculations:Terminal Value d #DIVPV of NCF Nd #DIVScenario: Real Options d #DIVStart Nd #DIVCash from Operations Price of call #DIVminus: Capital Expenditures Difference: Net Cash Flow NCF Value of Option over PVTerminal Value of PVPV of NCFPV of Cap. ExYrs We do a variation of prompts to and that we calculate the net present value of a project using two different options. The first one is scenario one with no real options, and the second one is the one with real options, in which we use the black option pricing system to come up with a new value. So let's get started. The normal option scenario. We have the two main capital expenditures in years one and two. These are not listed in scenario two for real options because they're captured right here in the present value of the capital expenditures for years one and two. These are investments that are have to be made in order from a project to go through. And that's explained here in the comment. So the net cash flow is going to be the cash from operations minus the capital expenditures. And that will go here. There's no cash from operations at the start because a business hasn't started. So we make the calculations here and then we run the present value of the net cash loss. What we do is we use the NPV function. And apply it to years one through seven. The discount rate is which is the opportunity cost of capital for the project. To that result, the NPV result, we add on discounted. This number here, which is a start because it takes place immediately. And then we also add the present value of the million that is received at the end of year seven. So this has to be added. And the formula is going to be divided by one plus the discount rate exponentiated to the seven. Make sure to put the parentheses in the denominator to control the order of operations. That's going to give you the present value of the net cash flows. For the no real option scenario.And the real option scenario, we do the same thing. Cash from operations minus capital expenditure is going to give you the net cash flow. And you calculate on these here, the present value of the NCF is going to be the NPV function applied to years one through seven using the discount rate to that result, we had the start net cash flow. And we also add the million divided by one plus at Exponentiated to a seven, which is the way in which we calculate present values of single cash flows. And that's going to give us a present value of the NCF The present value of the CapEx for years one and two is the NPV function applied to just these two, which are the investment capital expenditures. And the discount rate will be the risk free rate for this one. Okay, so check the comments section. Now for calculating the option pricing form. I already gave you the formula here, but you have to fill in the gaps. So the pricing value and CapEx from year one and two comes from right here. The present value of the NCF comes from right here. The risk free rate is given to you. Open this right here and then it will calculate and give you the price of the call option. You will compare this value calculated here with the value of that. Net cash flows from the no real option scenario. The difference in dollars goes right here. The difference in percent costs right here. And then you have to tell me whether or not you would take the option. The difference in percent is a dollars different compared to that Pbut the NCF in part two, we have a branch system in which we have a network expansion in our craft in three states Utah, Colorado and Arizona. The costs are for each row are going to be the cost that you find along the path. So for that you success path we have the costs are the sum of the start cashflow and start the success in phase one, the success in Utah. Well, but the phase two expenditure in Utah and then it success in phase three. So these costs are the sum of this one, this one, this one and this one. So basically what you're doing