​(Real options and capital budgeting​) You have come up with a great idea for a​ Tex-Mex-Thai fusion restaurant. After d

[answerhappygod]

​(Real options and capital budgeting​) You have come up with a
great idea for a​ Tex-Mex-Thai fusion restaurant. After doing a
financial analysis of this​ venture, you estimate that the initial
outlay will be ​$5.8 million. You also estimate that there is
a 50 percent chance that this new restaurant will be well received
and will produce annual cash flows of ​$760,000 per year forever​
(a perpetuity), while there is a percent chance of it producing a
cash flow of only ​$200,000 per year forever​ (a perpetuity) if it​
isn't received well.
a. What is the NPV of the restaurant if the required rate of
return you use to discount the project cash flows is
12​percent?
b. What are the real options that this analysis may be​
ignoring?
c. Explain why the project may be worthwhile even though you
have just estimated that its NPV is​ negative?