Here is the ORIGINAL data of the Sport Hotel project: 1. Projected outflows First year (Purchase...

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Here is the ORIGINAL data of the Sport Hotel project: 1.Projected outflows First year (Purchase Right, Land, and Permits)$1,000,000 Second Year (Construct building shell $2,000,000 ThirdYear: (Finish interior and furnishings) $2,000,000 TOTAL $5,000,0002. Projected inflows If the franchise is granted hotel will beworth: $8,000,000 when it opened If the franchise is denied hotelwill be worth: $2,000,000 when it opened. The probability of thecity being awarded the franchise is 50%. Suppose that everything isthe same as in that problem except TWO things: the worth of thehotel, should the city be awarded the franchise, is not $8 millionbut some unknown smaller number; and the probability of getting thefranchise is NOT 50% but is upgraded to 80%. What must the newworth of the hotel when the franchise is granted be in order forthe NPV of the Sporthotel project to be equal to exactly zero?

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Let W be the the new worth of the hotel when the franchise is granted so that the NPV of the Sporthotel project to be equal to exactly zero NPV of the hotel Probability that See Answer

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Here is the ORIGINAL data of the Sport Hotel project: 1.Projected outflows First year (Purchase Right, Land, and Permits)$1,000,000 Second Year (Construct building shell $2,000,000 ThirdYear: (Finish interior and furnishings) $2,000,000 TOTAL $5,000,0002. Projected inflows If the franchise is granted hotel will beworth: $8,000,000 when it opened If the franchise is denied hotelwill be worth: $2,000,000 when it opened. The probability of thecity being awarded the franchise is 50%. Suppose that everything isthe same as in that problem except TWO things: the worth of thehotel, should the city be awarded the franchise, is not $8 millionbut some unknown smaller number; and the probability of getting thefranchise is NOT 50% but is upgraded to 80%. What must the newworth of the hotel when the franchise is granted be in order forthe NPV of the Sporthotel project to be equal to exactly zero?