I am resubmitting 3 only at this time for completion. Nelson Manufacturing is considering a project which would require a $6.2 million investment…

I am resubmitting 3 only at this time for completion.1. Nelson Manufacturing is considering a project which would require a $6.2 million investment today (t = 0). The after-tax cash flows the factory generates will depend on whether the state imposes a new property tax. There is a 50-50 chance that the tax will pass. If the tax passes, the factory will produce after-tax cash flows of $1,000,000 at the end of each of the next 5 years. If the tax does not pass, the factory will produce after-tax cash flows of $2,000,000 for the next 5 years. The project has a WACC of 12%. If the factory is unsuccessful, the firm will have the option to abandon the project 1 year from now if the tax passes. If the factory project is abandoned, the firm will receive the expected $1 million cash flow at t = 1, and the property will be sold netting million (after taxes are considered) at t = 1. Once the project is abandoned, the company would no longer receive any cash inflows from it. What is the project’s expected NPV if it can be abandoned?a. $486,524b. $509,831c. $529,776d. $537,098e. $541,2342. Morgan Entertainment has a levered beta of 1.20. The firm’s capital structure consists of 40% debt and 60% equity and it has a corporate tax rate of 40%. What is Morgan’s unlevered beta? a. 0.7534b. 0.7811c. 0.8043d. 0.8249e. 0.85713. Which of the following statements is CORRECT?a. In general, the more uncertainty there is about market conditions, the more attractive it may be to wait before making an investment.b. In general, the greater the strategic advantages of being the first competitor to enter a given market, the more attractive it may be to wait before making an investment.c. In general, the higher the discount rate, the more attractive it may be to wait before making an investment.d. It is not possible for abandonment options to decrease a project’s risk as measured by the project’s coefficient of variation.e. Very few projects actually have real options. Real options are theoretically interesting but of little practical importance.

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