Suppose you are planning on becoming a vendor at the arena where your favorite sports team plays. You are trying to decide between opening up a souvenir stand selling t-shirts, caps, etc. with your sports teams logo or opening up a hot dog and beer stand. It is more expensive to open up the hot dog and beer stand because you need to purchase a license to serve alcohol and you need to spend money to comply with health department regulations. Revenue from the souvenir stand is likely to be unpredictable because fans of your favorite team tend to only want to purchase hats and t-shirts when the team is winning. But revenue from hot dogs and beer seem to be a little more steady since fans want to eat and drink regardless if the team is winning.

Below is a table with the initial investment cost of each type of stand and the annual payments you expect to gain for the next five years. The annual payments are different depending on how well your team does over the next five years, so you estimate how much cash flow you will get depending on whether your team does better than expected over the next five years (optimistic, the same as the last few years (most likely), and poorer than expected (pessimistic). Use a discount rate off 8%.

Based on the table below, answer the following items:

Calculate the net present value (NPV) for each type of stand under each of the three scenarios. Calculate the range of possible NPV values for each type of stand.

Based on your answer to A) above and your own guesses based on how well you think your favorite team will do over the next five years which type of stand would you rather invest in?

	Souvenir Stand	Hot Dog and Beer Stand
Initial Investment	$100,000	$150,000
	Annual Cash Inflows (5 Years)
Outcome
Pessimistic	$30,000	$50,000
Most likely	$50,000	$60,000
Optimistic	$70,000	$70,000

Use Excel and show formula to calculate.Thank you.