HCB, Inc. is considering expanding its educational offerings into a welding certificate with welding instructional facilities in Knoxville. The initial cost is $500,000 and if there is sufficient interest (probability 70% ), the cash flows will be $2 million per year for 3 years. If there isn't much interest (probability 30% ), cash flows will be $100,000 per year for 3 years. After 3 years, HCB can expand its operations to Nashville with a higher initial cost of $700,000 (because prices are higher in Nashville) to be paid in Year 3 and will receive the same cash flows it received in Knoxville but starting in Year 4 . That is, if the cash flows were $2 million a year in Knoxville, they would also be $2 million a year in Nashville. If they were $100,000 a year in Knoxville, they would also be $100,000 a year in Nashville. HCB will only expand into Nashville at Year 3 if it is profitable to do so. HCB's cost of capital is 10% and the risk-free rate is 6%. The $500,000 and $700,000 required investment costs are contractual amounts so they are risk-free. 13. Which one of the following statements is true about a decision tree analysis of the project? a. All cash flows will be discounted at 6%. b. All cash flows will be discounted at 10%. c. The $500,000 will be discounted 1 period at 10% and all remaining cash flows will be discounted at 6%. d. The $700,000 will be discounted 1 period at 10%, the $500,000 will be discounted 1 period at 6% and all remaining cash flows will be discounted at 10%. e. The $700,000 will be discounted 3 periods at 6%. All remaining cash flows will be discounted at 10%