Investment opportunity considering the combination

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Your firm is considering an investment opportunity that will require a $350 million outlay and the present value of the expected after-tax cash inflows equals $400 million with a standard deviation of 80%/year. If the assets associated with this investment opportunity could be liquidated (abandoned) for $200 m, or contracted by 40% (leaving 60% of the underlying asset) for a cash inflow of $100 m, or expanded by 60% at a cost of $250 m anytime over the next 3 years, what is the value of this investment opportunity considering the combination of all its options? What is the combined value of these three options? What is the NPV of this investment opportunity considering the combination of all its options? Note: I am not asking to consider each option separately but only the combined value of the set of options. (Apply a one-period per year binomial model.)

Reference no: EM132042805

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