# Probability that project will create more than 0 of

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Probability that project will create more than \$0 of value (based on simulation analysis) 16.1% A. Washington Football should be indifferent between accepting and rejecting the stadium project B. Washington Football should accept the stadium project C. Washington Football should reject the stadium project D. It is not clear whether Washington Football should accept or reject the stadium project, because the information provided is contradictory with respect to answering the question E. It is not clear whether Washington Football should accept or reject the stadium project, because the cost of capital for the project is not given (Fall 2009, test 4, question 6) (Spring 2010, final, question 10) (Fall 2010, test 4, question 5) (Fall 2011, final, question 15) (Fall 2012, test 4, question 6) (Spring 2013, test 4, question 6) (Fall 2013, final, question 14) (Spring 2014, final, question 13) (Fall 2014, test 4, question 7) (Spring 2015, test 3, question 6) (Fall 2015, test 3, question 10) (Spring 2016, test 3, question 10) (Fall 2016, test 3, question 9) 5
FNAN 303 Test bank problems – relevant cash flows and NPV analysis 23. Washington Football owns a football team in Washington, DC. The objective of its managers is to maximize shareholder value. The firm is evaluating the stadium project, which involves building a new stadium in Fairfax County. 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) -\$130,000 Value created if the team wins 11 games a season (based on scenario analysis) \$2,700,000 Value created if worst-case taxes occur (based on sensitivity analysis) -\$650,000 Value created if best-case taxes occur (based on sensitivity analysis) \$2,900,000 Probability that project will create more than \$0 of value (based on simulation analysis) 82.7% A. Washington Football should be indifferent between accepting and rejecting the stadium project B. Washington Football should accept the stadium project C. Washington Football should reject the stadium project D. It is not clear whether Washington Football should accept or reject the stadium project, because the information provided is contradictory with respect to answering the question E. It is not clear whether Washington Football should accept or reject the stadium project, because the cost of capital for the project is not given (Fall 2009, test 4, question 6) (Spring 2010, final, question 10) (Fall 2010, test 4, question 5) (Fall 2011, final, question 15) (Fall 2012, test 4, question 6) (Spring 2013, test 4, question 6) (Fall 2013, final, question 14) (Spring 2014, final, question 13) (Fall 2014, test 4, question 7) (Spring 2015, test 3, question 6) (Fall 2015, test 3, question 10) (Spring 2016, test 3, question 10) (Fall 2016, test 3, question 9)