CT Inc. is evaluating a project that would cost P8 million at t = 0. There is a 50% chance that the project would be highly successful and generate annual after-tax cash flows of P6 million during...

CT Inc. is evaluating a project that would cost P8 million at t = 0.  There is a 50% chance that the project would be highly successful and generate annual after-tax cash flows of P6 million during Years 1, 2, and 3.  However, there is a 50% chance that it would be less successful and would generate only P1 million for each of the 3 years.  If the project is highly successful, it would open the door for another investment of P10 million at the end of Year 2, and this new investment could be sold for P20 million at the end of Year 3.  However, if the project is unsuccessful, the new P10 million investment at the end of Year 2 would only be sold for P5,000,000 at the end of Year 3. Assume a WACC of 12.0%.

Listed below are the requirements for this data set:

• What is the project's expected NPV if the company would not take the growth option?
  (Round final answer to the nearest peso)
  


• What is the project's expected NPV after taking into account this growth option?
  (Round final answer to the nearest peso)
  


• What would Ewan Inc. do given the computed expected NPV for each alternative?