What is the new npv of the project

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Reference no: EM132018578

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. The change to consider is this: suppose that the value of the hotel is one of two values: $8.6 million if the city is successful in obtaining the franchise (and not $8 million as in the original problem) or $3.1 if the city is not successful in obtaining the franchise (and not $2 million as in the original problem). All other aspects of the problem are the same as originally presented. Incorporating these new values, and the real option, what is the new NPV of the project? $ ______million.

Reference no: EM132018578

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