ramdabom

Since it is really asking what is the NPV if you do the expansion project, you have to get the NPV of the base case. Then you have to calculate the NPV starting on YR 1 for the expansion project. With the probability of 50% for the project being done, you add this NPV amt to the base case.
I found the Corp. Finance challenging. A lot of tiny detail calculations you have to watch out.