10.10 Consider the following alternative earnout for VASM’s Mr. Webster. The other components of the consideration stay the same. The earnout would pay 3.484 times the excess of 3rd-year EBITDA over $6 million. The riskless 3-year annual compound interest rate is r = 5%. The 95% confidence range of VASM’s revenue growth is [−20%, 40%]. (Hint:

Estimate volatility as one-fourth of this range). What is the value of the earnout?