1.Expected Value

Anastasia is considering selling her successful Fintech startup Bingo to Megabank. Megabank is offering $18 million for 60% of the company. She's the sole shareholder. Megabank has not specified the terms under which they would acquire the rest of the business. She knows she needs substantial capital to build out the business and Megabank promises to make the investment Bingo really needs. Also, Megabank tells Anastasia she will get to stay on and run the business, even though Todd, the internal innovation head, does not like Bingo or Anastasia. But Anastasia is pretty confident in Bingo's future and wants to make sure she's not giving up all the upside if Bingo succeeds. She's calculated an expected value based on different scenarios over the next five years for the company to compare with Megabank's offer. If the business fails, (50% chance) she will lose the $1 million she's invested. If it reaches her forecast results, (25% chance) Bingo is worth $100 million. If it reaches only 10% of her forecast, (25% chance), Bingo is worth $10 million. (40 pts)

Should she accept Megabank's offer?

What else, if anything, should she ask for?