Welcome back. So, in order to figure out what will

happen to the share price, you have to first figure out the value enhancement of

the decision which IRRs can't tell you. Luckily, we have enough information to do

it. So, let's get started.

You want to do the NPV of the decision. Why?

Because IRR is not telling you the NPV. And NPV is in dollars.

Irr tragedy, is it? It's percentage, alright?

So, okay, let's, let's get started. How do you do NPV?

Npv is minus I NOT, plus PV of C1, C2, and so on, right?

Everybody okay? I've done this formula many times.

The good news is what? The good news is if I can make C1, C2 the

same and I make it a perpetuity, what does this formula become?

C / R, where Ra and which business? Software, because I am going to get into

the software business. So, the question is do I know this number?

You should know this number. How much money does it take to start this

project? 50 billion.

Everybody okay? How much value am I creating every year?

Cash flows every year? 5.5 million, Remember how did I get this?

You've done this when doing the IRR. You just twist now, 5.5 I got very simple,

seven million with 50 percent probability, 3.5, five million with 40 percent

probability, two. 3.5 +

Two is 5.5 and you may lose, you may make no money with ten percent probability so

you can ignore that. You know that, but what is Ra and here

comes the key thing, what Ra will be used? You'll use the software Ra, not the

twelve%. Which is RA for what?

We do [inaudible]. So, you'll do 0.101.

And now I'm going to fudge a little bit because, I told you I'm not [unknown and

0.101 is going to throw me off a little bit and make me do a calculation.

So, I'm saying, let it be approximately ten%, right?

So, this is what? Minus 50 million plus 5.5 divided by 0.1

is what? 55 million.

You see I fudged a little. That's okay, we are family.

Plus five million. You see the coolness of this?

So, my value creation is net of my investment.

So, don't ever think that your value creation is 55 because 50, it takes 50

million to create 55. So, my net present value is five million.

What will happen to the stock price? Very simple.

Take the five million and divide by how much?