Calculate the NPV of the project if the CEO’s proposal is accepted the value of the option to delay the project.

Calculate the NPV of the project if the CEO’s proposal is accepted the value of the option to delay the project Question 31 – Answer all parts
Mitch Plc, a UK-based smart phone manufacturer, is considering adding a new model of smart phones to its current production line. The success of the new model depends on general market conditions. Mitch’s current share price is £100.
If the conditions are good, the revenues from the project are estimated to be £30 million a year for 5 years, starting a year from now, and the share price will be £150. On the other hand, if the conditions are bad, the revenues are expected to be £5 million a year for the first 3 years, and £2 million for the remaining 2 years of the project, and the share price will be £50. The initial cost of the project is £50 million. The risk-free rate is 10%.
Required
a)  Calculate the Net Present Value (NPV) of the project.

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