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A young product development employee, Jesse, proposed this idea and also submitted the following details about the project: The division would need an initial investment of $5.0 million. Jesse expects that this division will bring in an additional $4.4 million at the end of each of the next five years. The project's cost of capital is 10%, and the risk-free rate is 4%. The WACC is used to discount all cash flows Based on the given information, what is the project's expected net present value (NPV)? (Note: Do not round intermediate calculations.) $17.52 million $11.68 million $12.85 million $9.34 million Based on discussions with lawyers, there is a 60% chance that the tax would not be imposed, in which case the project would generate a cash flow of $6.7 million. If a financlal services tax Is imposed, the project would generate a cash flow of $1.0 mllion. Lesnor Co. now has the option of knowing about the tax situation before it commits to the project Lesnor's management decides to wait for a year before they make decision on launching the project. However, Jesse mentions that the cash flow estimations for the project will remain valid only for the next five years. (For valuation purposes, the project has the same end date even with the option of waiting.) In the meantime, the managers decide to invest $5.0 million in securities for one year, which is expected to generate a rate of return equal to the project's cost of capital. Based on the information that Jesse submitted in his report, calculate the values in the following table. Use the WACC to discount all cash flows. (Note: Do not round intermediate calculations.) Value NPV of the project after one year Option value of waiting Using the Black-Scholes option pricing$2.20 million sse takes his research a step further and calculates more variables to find the value of the option of waiting for one year to accep 3.61 million roject. He uses N(d1) 0.9815, N(d2) = 0.9325, and 2.7183 as the approximate value of e. If Jesse uses the Black-Scholes OPM, wh lue of the option of waiting for one year? (Note: Do not round intermediate calculations.) $4.42 million $5.61 million $8.86 million Using the Black-Scholes option pricing model (OPM), Jesse takes his research a step further and calculates more variables to find the value of the option of waiting for one year to accept or reject the project. He uses N(d1) 0.9815, N(d2) = 0.9325, and 2.7183 as the approximate value of e. If Jesse uses the Black-Scholes OPM, what will be the value of the option of waiting for one year? (Note: Do not round intermediate calculations.) $5.61 million $10.43 million $9.62 million $8.02 million

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