The Owner of a Pro-Football Team Expects the Team to Be

question 39

Multiple Choice

The owner of a pro-football team expects the team to be worth either $270 million next year or $120 million, depending on whether or not she gets the city to build a new stadium. There is a 60 percent chance she will get a new stadium. There is a buyer willing to pay $180 million for the team right now. However, the buyer will keep his offer open-until the stadium issue is resolved-if offered some form of compensation. If the interest rate is 6 percent, how much should she be willing to pay the potential buyer for a one-year option to sell the team (round to the nearest $1 million) ?

• A)0
• B)$40 million
• C)$42 million
• D)$21 million

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Definitions:

Withdrawing

The act of pulling back or removing oneself from a particular situation, interaction, or engagement.

Primary Reinforcer

A stimulus that satisfies a basic need or inherently reinforces a behavior, such as food or water.

Water

A transparent, tasteless, odorless, and nearly colorless chemical substance, composed of hydrogen and oxygen (H2O), that is the main constituent of Earth's hydrosphere and the fluids of most living organisms.

Grades

Marks or scores assigned to students' work to indicate the quality of their performance, typically on a scale from A to F.