Given cash flow 776.79 for 2016, 693.56 for 2017, 747.37 for2018 and 921.50 for 2019,consider the situation where there is an80% chance of the market being robust and generating the revenues,and hence the cash flows that Voice-Soft is expecting. However,there is a 20% chance that the market is not ready for Voice-Writeproduct and generates only 50% of the cash flows for 2017-2020. Thefirm is considering the option of waiting until next year (thedeferment option) to introduce the product. Determine the differentNPVs for the firm under uncertainty for both current yearintroduction and deferment option. You should use a discount rateof 10%.Project without delay of introductionCash Flows at the end of each periodNPV@10%OutcomeProbability02016201720182019High CFs80%Low CFs20%Expected NPVStandard DeviationCoefficient of VariationProject with the deferment optionCash Flows at the end of each periodNPV @10%OutcomeProbability020162017201820192020High CFs80%Low CFs20%Expected NPVStandard DeviationCoefficient of VariationValue of the Timing Option to Voice-Soft, Inc.NPV without delayNPV with delayValue of the option to delayAnalyze the results above. Be sure to include: Why is 10% (anumber less than the firmAc€?cs WACC) appropriate in this instance?Summarize whether Voice-Soft, Inc. should delay the introduction ofVoice-Write one year or not and the risk associated with thatdecision. Specifically address how a positive NPV project (or realoption) adds value to the stock price of the firm. What problemspotentially exist in the firmAc€?cs forecast? (Be sure to consider Cashflow estimation and WACC calculation and capital structure)why it is resonable to use 10% as an appropriate cost of capitalin above option.
Given cash flow 776.79 for 2016, 693.56 for 2017, 747.37 for2018 and 921.50 for 2019,consider the s
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