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A pro football team has a NPV of $200 million. There is a 70% chance the team will get a new stadium within 1 year
A pro football team has a NPV of $200 million. There is a 70% chance the team will get a new stadium within 1 year and the value of the team will increase to $350 million. To keep the team from moving, a rich local benefactor has offered to buy the team for $200 million today. Given a 12% discount rate what is the most the current owner should be willing to offer the benefactor to keep the offer on the table until the end of the year?
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