S You may attempt this question 2 more times for credit. This question is a variant of the Sport Hotel example that was presented in class, in the class notes, and in the Real Option chapter. Suppose that in the example, the first year expenditures that include the purchase of plans and permits is not $1 million but instead $0.9 million. All other aspects of the problem are the same as originally presented. Incorporating these new values, the probability that the city is awarded the franchise at 50%, and the real option, what is the new NPV of the project? $ million Place your answer in millions of dollars using at least three decimal places. For example, the answer of nine hundred seventy five thousand would be entered as 0.975 and not as 975000.
S You may attempt this question 2 more times for credit. This question is a variant of the Sport Hotel example that was presented in class, in the class notes, and in the Real Option chapter. Suppose that in the example, the first year expenditures that include the purchase of plans and permits is not $1 million but instead $0.9 million. All other aspects of the problem are the same as originally presented. Incorporating these new values, the probability that the city is awarded the franchise at 50%, and the real option, what is the new NPV of the project? $ million Place your answer in millions of dollars using at least three decimal places. For example, the answer of nine hundred seventy five thousand would be entered as 0.975 and not as 975000.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:S
You may attempt this question 2 more times for credit.
This question is a variant of the Sport Hotel example that was presented in class, in the class notes,
and in the Real Option chapter. Suppose that in the example, the first year expenditures that include
the purchase of plans and permits is not $1 million but instead $0.9 million. All other aspects of the
problem are the same as originally presented. Incorporating these new values, the probability that
the city is awarded the franchise at 50%, and the real option, what is the new NPV of the project?
$
million
Place your answer in millions of dollars using at least three decimal places. For example, the
answer of nine hundred seventy five thousand would be entered as 0.975 and not as 975000.
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