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Unformatted text preview: A. $50m
15. In 2000 the Province of British Columbia forecast that the 2010 Olympic Games
would cost $1m and yield benefits equal to $1b. Investment for the games was begun and
$500m had been spent by the end of 2006. A re-evaluation was undertaken in 2007. At
that time it was estimated that only $200m of the amount already spent could be
recovered if the games were cancelled. Completing the games would require another
$500m in costs. Moreover, new information suggested that the games would yield only
$800m in benefits rather than the $1b originally forecast.*
As at 2007, what is the continuation payoff for the games?
D. $300m 8 16. Recall Question 15. Suppose the province had been blessed with perfect foresight
back in 2000. What would have been the expected net benefit of the games?
17. Recall Question 15. What should the 2007 re-evaluation have recommended?
A. Cancel the games.
B. Complete the games....
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- Spring '14