Business, 22.06.2020 21:57, realmofgrads23

Here is the ORIGINAL data of the Sporthotel problem: 1. Projected outflows First year (Purchase Right, Land, and Permits) $1,000,000 Second Year (Construct building shell $2,000,000 Third Year: (Finish interior and furnishings) $2,000,000 TOTAL $5,000,000
2. Projected inflows If the franchise is granted hotel will be worth: $8,000,000 when it opened If the franchise is denied hotel will be worth: $2,000,000 when it opened. The probability of the city being awarded the franchise is 50%.
Assume that everything is the same as in that problem except for two things: the probability that the city will be awarded the franchise is not 50% but is downgraded to 30%, and the third year projected outflow (finish interior and furnishings) is not $2 million but $1 million. Given these two changes, which of the following is true when the franchise is granted?
a. The projectA1s NPV = $0.80 million
b. The projectA1s NPV = $0.90 million
c. The projectA1s NPV = $0.60 million
d. The projectA1s NPV = $1.00 million
e. The projectA1s NPV = $0.70 million

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Here is the ORIGINAL data of the Sporthotel problem: 1. Projected outflows First year (Purchase Rig...