Question 7 2.5 pts You own a small manufacturing plant. Last year the plant generated a revenue of $20 million. This year (t=1), based upon a decision on a long-term government contract, your revenues will either increase to $25 million or fall to $15 million with equal probability and stay at that level as long as you operate the plant. Other costs run $10 million per year. You can sell the plant at any time to a large conglomerate for $100 million. Your cost of capital is 10%, and there are no taxes. 1. What is the value of the plant today? [Select] 2. Now suppose that if you decide to sell the plant, you can sell it for only $30 million instead of $100 million. Will you ever sell the plant? [ Select] Question 7 2.5 pts You own a small manufacturing plant. Last year the plant generated a revenue of $20 million. This year (t=1), based upon a decision on a long-term government contract, your revenues will either increase to $25 million or fall to $15 million with equal probability and stay at that level as long as you operate the plant. Other costs run $10 million per year. You can sell the plant at any time to a large conglomerate for $100 million. Your cost of capital is 10%, and there are no taxes. 1. What is the value of the plant today? [Select] 2. Now suppose that if you decide to sell the plant, you can sell it for only $30 million instead of $100 million. Will you ever sell the plant? [ Select]