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General Tin (GT. is worried that its mine in Peru will be expropriated during the next 12 months. The Peruvian government has promised, however, to

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General Tin (GT. is worried that its mine in Peru will be expropriated during the next 12 months. The Peruvian government has promised, however, to pay compensation of $15 million at the year's end if it expropriates the mine. GT believes that this promise would be kept. If expropriation does not occur this year, it will not occur anytime in the foreseeable future. The mine is expected to be worth $50 million at the end of the year. A wealthy Peruvian has just offered GT $19 million for the mine today. If GT's risk-adjusted discount rate is 22%, what is the probability of expropriation at which GT is just indifferent between selling now or holding on to its mine? a. 71.2% b. 76.6% c. 23.5% d. 18.9%

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