Consider the SportHotel example from the opening of Chapter 9: 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: If the franchise is denied hotel will be worth: $8,000,000 when it opened $2,000,000 when it opened. Suppose that everything is the same except for two things: (1) the value of the hotel, should be city be awarded the franchise, is not $8 million but instead is $9 million, and (2) the first year projected outflow is not $1 million but instead is $1.50 million. Using the real option, and given these two changes, which of the following is true? a. NPV = $0.00 million b. NPV = $0.25 million c. NPV = $1.00 million d. NPV = $0.75 million e. NPV = $0.50 million Consider the SportHotel example from the opening of Chapter 9: 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: If the franchise is denied hotel will be worth: $8,000,000 when it opened $2,000,000 when it opened. Suppose that everything is the same except for two things: (1) the value of the hotel, should be city be awarded the franchise, is not $8 million but instead is $9 million, and (2) the first year projected outflow is not $1 million but instead is $1.50 million. Using the real option, and given these two changes, which of the following is true? a. NPV = $0.00 million b. NPV = $0.25 million c. NPV = $1.00 million d. NPV = $0.75 million e. NPV = $0.50 million