1. Here is the ORIGINAL data of the Sporthotel problem: 1. Projected outflows First year (Purchase Right, Land, and Permits) $1,000,000 Second Year (Construct building shell $2,000,000 Third Year: (Finish interior and furnishings) $2,000,000 TOTAL $5,000,000 2. Projected inflows If the franchise is granted hotel will be worth: $8,000,000 when it opened If the franchise is denied hotel will be worth: $2,000,000 when it opened. The probability of the city being awarded the franchise is 50%. Assume that everything is the same in the problem except for one thing: the first year projected outflow is not $1 million but instead is $1.1 million. Given this change, which of the following is true when the franchise is granted?

	a.	The projects NPV = $1.00 million
	b.	The projects NPV = $0.90 million
	c.	The projects NPV = $0.80 million
	d.	The projects NPV = $0.70 million
	e.	The projects NPV = $0.60 million

2. Sara bought a straddle on Brent with the following characteristics: exercise price = $5, premium of call = $1, and the premium of put is $1.50. Which of the following is TRUE if at this moment the price of Brent is $5.50 per share?

	a.	The call is in-the-money and the put is out-of-the-money
	b.	The call is in-the-money and the put is at-the-money
	c.	Both the call and the put are in-the-money
	d.	The call is out-of-the-money and the put is in-the-money
	e.	Both the call and the put are out-of-the-money