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3. EtaGo has two available projects, A and B. A costs 100 at to and will generate a cash flow 242 at t1. B costs 340 at to and will also generate the...

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3. EtaGo has two available projects, A and B. A costs 100 at to and will generate a cashflow 242 at t1. B costs 340 at to and will also generate the cash flow 242 at t1. IfEtaGo invests in both A and B, the total cash flow will be 605 at t1. (a) What is EtaGo’s optimal investment at to? (b) Suppose that another company wants to sell one project A to EtaGo at the price30. Will EtaGo buy? Will it invest in project B?
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