12-1sol - greater NPV, under other circumstances,...

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PROBLEM 12-1 Solution Legend = Value given in problem = Formula/Calculation/Analysis required = Qualitative analysis or Short answer required = Goal Seek or Solver cell = Crystal Ball Input = Crystal Ball Output By waiting to develop, the company retains the option to develop the higher NPV project--under certain scenarios, the high-density hotels will provide
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Unformatted text preview: greater NPV, under other circumstances, low-density hotels will provide higher NPV. Of course, by waiting one loses the opportunity to gain a (dividend) yield that would accrue if one develops right away. The tradeoff is between the lost rents (profits) and the additional NPV that could be gained by taking the correct decision....
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This note was uploaded on 07/24/2009 for the course FIN FIN taught by Professor Robbani during the Summer '09 term at University of Maryland Baltimore.

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