Return to the sport hotel example in the course notes

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Return to the Sport Hotel example in the course notes and in Chapter 9. Suppose that everything stays the same as was presented in the original problem (for example, the costs each year, the value of the hotel under the two scenarios, and the probability of the city being awarded the franchise) except for two things: the projected expenditures in the first year is not as originally given at $1 million but instead is $1.055 million, and the probability of being awarded the franchise is not as originally estimated at 50% but is 36%. Using these new values, and incorporating the real option, what would the NPV be at the decision node B on the decision tree?

Reference no: EM131056483

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