1. You are looking into the purchase of a condominium complex for your privately-held real estate firm REInvest Corp. The condominium complex would cost $38 million today. This condominium complex would be a typical investment for CondoPlus Inc. You think that the outcomes of this investment will depend on how the economy does in the near future. You think that there is a 40% chance that the economy will keep improving. This will result in CFs of $5 million next year, with the CFs increasing by 5% per year into perpetuity. There is a 30% chance of the economy growing very slowly, which will result in CFs of $3 million next year with 2% growth per year in perpetuity. And there is a 30% chance that the economy will shrink, causing CFs to be $1 million next year with only 1% growth per year into perpetuity. You could purchase an option to sell the condominium complex exactly 1 year from now for $25 million. How much is this option worth? The discount rate is 12%. 1. You are looking into the purchase of a condominium complex for your privately-held real estate firm REInvest Corp. The condominium complex would cost $38 million today. This condominium complex would be a typical investment for CondoPlus Inc. You think that the outcomes of this investment will depend on how the economy does in the near future. You think that there is a 40% chance that the economy will keep improving. This will result in CFs of $5 million next year, with the CFs increasing by 5% per year into perpetuity. There is a 30% chance of the economy growing very slowly, which will result in CFs of $3 million next year with 2% growth per year in perpetuity. And there is a 30% chance that the economy will shrink, causing CFs to be $1 million next year with only 1% growth per year into perpetuity. You could purchase an option to sell the condominium complex exactly 1 year from now for $25 million. How much is this option worth? The discount rate is 12%