题目 ：A final proposal comes from the division Society Services, which has an investment opportunity with a real option to invest further if conditions warrant. The crucial details are as follows:
The original project:
An outlay of C$190 million at time zero.
Cash flows of C$40 million per year for Years 1–10 if demand is “high.”
Cash flows of C$20 million per year for Years 1–10 if demand is “low.”
Additional cash flows with the optional expansion project:
An outlay of C$190 million at time one.
Cash flows of C$40 million per year for Years 2–10 if demand is “high.”
Cash flows of C$20 million per year for Years 2–10 if demand is “low.”
Whether demand is “high” or “low” in Years 1–10 will be revealed during the first year. The probability of “high” demand is 0.50, and the probability of “low” demand is 0.50.
The option to make the expansion investment depends on making the initial investment. If the initial investment is not made, the option to expand does not exist.
The required rate of return is 10 percent.
(Institute 72)
问题
18 What is the NPV (C$ millions) of the optimal set of investment decisions for Society Services including the expansion option?
6.34.
12.68.
31.03.
(Institute 73)
Institute, CFA. 2018 CFA Program Level II Volume 3 Corporate Finance. CFA Institute, 07/2017. VitalBook file.
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