Here is the ORIGINAL data of the Sporthotel problem:

Assume that everything is the same as in that problem except for two things: the probability that the city will be awarded the franchise is not 50% but is downgraded to 25%, and the third year projected outflow (finish interior and furnishings) is not $2 million but $1 million. Given these two changes, which of the following is true when the franchise is granted?

a. The projects NPV = $0.75 million

b. The projects NPV = $1.00 million

c. The projects NPV = $0.50 million

d. The projects NPV = $0.25 million

e. The projects NPV = $0.00 million

1. Projected outflows First year (Purchase Right, Land, and Permits) $1,000,000 $2,000,000 Second Year (Construct building shell Third Yea r: (Finish erior and furnishings 2,000,000 $5,000,000 TOTAL 2. Projected inflows $8,000,000 when it opened If the franchise is granted hotel will be worth $2,000,000 when it opened If the franchise is denied hotel will be worth The probability of the city being awarded the franchise is 50%. 1. Projected outflows First year (Purchase Right, Land, and Permits) $1,000,000 $2,000,000 Second Year (Construct building shell Third Yea r: (Finish erior and furnishings 2,000,000 $5,000,000 TOTAL 2. Projected inflows $8,000,000 when it opened If the franchise is granted hotel will be worth $2,000,000 when it opened If the franchise is denied hotel will be worth The probability of the city being awarded the franchise is 50%