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XYZ owns and operates sports facilities. The objective of its managers is to maximize shareholder value. The firm is evaluating the hoops project, which involves
XYZ owns and operates sports facilities. The objective of its managers is to maximize shareholder value. The firm is evaluating the hoops project, which involves building a basketball court in a local mall. Which assertion is true, based on the information given in the question and the following table on the project?
Base-case NPV (based on final estimates and expectations) | $15,500.00 |
Value created if 50 or more inches of snow fall in winter (based on scenario analysis) | $-53,200.00 |
Value created if worst-case sales occur (based on sensitivity analysis) | $-85,100.00 |
Value created if best-case sales occur (based on sensitivity analysis) | $25,400.00 |
Probability that project will create more than $0 of value (based on simulation analysis) | 14.39 |
XYZ should accept the hoops project | ||
XYZ should be indifferent between accepting and rejecting the hoops project | ||
XYZ should reject the hoops project | ||
It is not clear whether XYZ should accept or reject the hoops project, because the cost of capital is not given | ||
It is not clear whether XYZ should accept or reject the hoops project, because the information that is provided is contradictory with respect to answering the question |
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