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)	$15,000.00
Value created if 50 or more inches of snow fall in winter (based on scenario analysis)	$-54,700.00
Value created if worst-case sales occur (based on sensitivity analysis)	$-86,700.00
Value created if best-case sales occur (based on sensitivity analysis)	$26,700.00
Probability that project will create more than $0 of value (based on simulation analysis)	11.98

		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
		It is not clear whether XYZ should accept or reject the hoops project, because the cost of capital is not given
		XYZ should be indifferent between accepting and rejecting the hoops project
		XYZ should accept the hoops project
		XYZ should reject the hoops project

XYZ operates a chain of bakeries and is considering the sprinkle cookie project, which would involve selling sprinkle cookies for 1 year. The firm expects sales of sprinkle cookies to be $140,000 and associated costs from flour, butter, sugar, etc. used to make sprinkle cookies to be $68,000. The firm believes that sales of frosted cookies, a type of cookie that is currently offered by the firm, would be $30,000 less with the addition of sprinkle cookies, and that costs associated with frosted cookies would be $16,000 less with the addition of sprinkle cookies. Finally, XYZ believes that sprinkle cookies would increase traffic to its bakeries, which would increase expected sales of bread, cakes, and other items by $26,000 more than it would be without the addition of sprinkle cookies, and increase costs of bread, cakes, and other items by $10,000 more than it would be without the addition of sprinkle cookies. What is the relevant net income in year 1 that XYZ should use to analyze the sprinkle cookie project? The tax rate is 50 percent, the cost of capital is 3.6 percent, and there is no relevant depreciation.

		$36,000 (plus or minus $10)
		$51,000 (plus or minus $10)
		$37,000 (plus or minus $10)
		$21,000 (plus or minus $10)
		None of the above is within $10 of the correct answer