Firm BGS raises $5M now but will need an extra $15M in one year's time if the development of the product works out well. The probability of good news being received in one year is 80% and the probability of bad news is 20%. If bad news is realized, there is a 10% chance that something can be worked out but 90% chance that the product is a complete dud. Firm value (or payoff) if a product can be produced is $100M. What is ownership of VC if the funding is not staged; i.e., all $20M is given to founders right away instead of staging?

a.25.00%

b.20.55%

c.20.00%

d.24.39%

e.None of the above