A startup firm Northstar is considering building a hotel next to a new hockey arena in a city that is 1 of 3 vying for a

[answerhappygod]

A startup firm Northstar is considering building a hotel next to
a new hockey arena in a city that is 1 of 3 vying for a new NHL
franchise.
The NHL will announce which city will be awarded the franchise
in one year, and that team will begin
playing three years from today.
Because Northstar would like to be the official hotel of the NHL
team, the property must be ready for guests when the first game is
played in three years. It takes three years to build the
hotel.
Projected Annual Cash Outflow to Build The Hotel Over
3-Years:
In 1-Year: Purchase Rights and Permits, Dig Hotel Foundation
$2 million
In 2-Years: Construct building shell, attach electrical and
plumbing $3 million
In 3-Years: Finish exterior and all interior $5 million
Projected Present Value from Operating the Hotel in Two
Scenarios
Scenario #1: Good Case: The City Is Awarded The Franchise:
$11 million
Scenario #2: Bad Case: The City Is Denied The Franchise:
$3 million
For simplicity, let’s assume that the discount rate is 0%. Also,
assume that the firm doesn't have the option to quit. Once they
start at year 1 (after purchase the permit and dig the hotel
foundation), they must finish the project.
If the probability the city is awarded the Francise is 0.5,
what is the expected NPV of this project?