Ellen is a co-founder of a venture called "WholesomeExperience" where she has a 10% stake. If she keeps working hard developing WholesomeExperience, there is 10% chance that she will be able to sell the venture through acquisition for $130 million in 3 years from today. If the acquisition fails, the venture will get $1 million. Currently, Ellen has an outside job offer from a big corporation that pays $350,000 per year according to a guaranteed 3-year employment contract.

1. Compute the current economic value of Ellen's stake in WholesomeExperience assuming that Ellen is risk neutral and the risk-free rate is 2.5% per year.

2. Compute the current economic value of Ellen's stake in WholesomeExperience assuming that Ellen is risk averse and the risk-adjusted discount rate she is using in the valuation is 15% per year.

3. Compute the current economic value of Ellen's employment contract assuming that Ellen is risk neutral. Should Ellen continue with her entrepreneurship efforts or take the job offer?

4. Compute the current economic value of Ellen's employment contract assuming that Ellen is risk averse. Should Ellen continue with her entrepreneurship efforts or take the job offer?

5. Suppose Ellen's utility function is u(x) = x 1 1 , where = 0.5. Compute the certainty equivalent value of Ellen's equity at the time she is making the decision to continue with her entrepreneurship efforts or take the job offer. Explain what the result means using one or two sentences.

6. Compute answers to part 5. if = 2. Compare the result with your result in part 5. and explain what the result means using one or two sentences