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help Consider an investment opportunity with an option to...

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Consider an investment opportunity with an option to grow that requires a $4 million investment today. In one year, you will find out whether the project is successful. The probability of being successful in year 1 is 20% and in this case the project generates $1.2 million in revenue per year in perpetuity; otherwise, the project will generate nothing. You have the option to grow at the end of year 2. you can double the size of the project on the original terms. The appropriate cost of capital is 12%. Calculate the following two L. The NPV of the investment opportunity WITHOUT the option to grow. 1. The value of the option to grow. The value of the following two is closest to O a $0.0 million: 11: $1.3 million Ob $2.0 million; IL $1.3 million Od L-S1.0 million; I. $1.0 million O d. $10 million; II. $1.3 milion O e I. $0.0 million, 11. $1.0 million Of I. $20 million; IL $1.0 million

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