1.

0.4 42,500,000.00 PATH 1

35,000,000.00
0.6 0.6 35,000,000.00 PATH 2

(70,000,000.00)

0.4 0.4 75,000,000.00 PATH 3

45,000,000.00
0.6 60,000,000.00 PATH 4

PATH 1

NPV = -70000000+35000000*(1.1^-1)+42500000*(1.1^-2)

= P (3,057,851.24)

PROBABILITY = .60*.40

=.24

PATH 2

NPV = -70000000+35000000*(1.1^-1)+35000000*(1.1^-2)

= P (9,256,198.35)

PROBABILITY = .60*.60

=.36

PATH 3

NPV = -70000000+45000000*(1.1^-1)+75000000*(1.1^-2)

= P 32,892,561.98

PROBABILITY = .40*.40

=.16

PATH 4

NPV = -70000000+45000000*(1.1^-1)+60000000*(1.1^-2)
 = P20,495,867.77

PROBABILITY = .40*.60

=.24
_________

100

EXPECTED NPV = - 3,057,851.24 (.24) - 9,256,198.35 (.36) + 32,892,561.98 (.16) + 20,495,867.77 (.24)

= P6,115,702.48

2.
YEAR 1 YEAR 2 YEAR 3 YEAR 4
7,500,000.00 0.3 2,250,000.00 10,000,000.00 0.35 3,500,000.00 17,500,000.00 0.3 5,250,000.00 15,000,000.00 0.25 3,750,000.00
8,750,000.00 0.4 3,500,000.00 10,500,000.00 0.45 4,725,000.00 18,500,000.00 0.25 4,625,000.00 18,000,000.00 0.35 6,300,000.00
15,000,000.00 0.3 4,500,000.00 12,500,000.00 0.2 2,500,000.00 20,000,000.00 0.45 9,000,000.00 18,750,000.00 0.40 7,500,000.00
10,250,000.00 10,725,000.00 18,875,000.00 17,550,000.00

BEST WORST MOST LIKELY

CF0 (33,750,000.00) (33,750,000.00) (33,750,000.00)
CF1 15,000,000.00 7,500,000.00 10,250,000.00
CF2 12,500,000.00 10,000,000.00 10,725,000.00
CF3 20,000,000.00 17,500,000.00 18,875,000.00
CF4 18,750,000.00 15,000,000.00 17,550,000.00

BEST
NPV = -33750000+15000000*(1.1^-1)+12500000*(1.1^-2)+20000000*(1.1^-
3)+18750000*(1.1^-4)

= 18,049,740.45

WORST
NPV= -33750000+7500000*(1.1^-1)+10000000*(1.1^-2)+17500000*(1.1^-
3)+15000000*(1.1^-4)

= 4,725,855.47

MOST LIKELY

NPV = -33750000+10250000*(1.1^-1)+10725000*(1.1^-2)+18875000*(1.1^-
3)+17550000*(1.1^-4)

= 10,599,771.19
C) PROBABILITIES:
BEST = .30*.20*.40*.40
=0.0108

WORST = .30*.35*.30*.35
= 0.00788