NBC has the rights to televise the Winter Olympics in two years, and is trying to estimate the value of these rights for possible sale to another network. NBC expects it to cost \($40\) million (in present value terms) to televise the Olympics, and based on current assessments expects to have a Nielsen rating8 of 15 for the games. Each rating point is expected to yield net revenue of \($2\) million to NBC (in present value terms). There is substantial variability in this estimate, and the standard deviation in the expected net revenues is 30%. The riskless rate is 5%.

a. What is the net present value of these rights, based on current assessments?

b. Estimate the value of these rights for sale to another network.