Suppose a firm projects cash flows of $$2\mathrm{.}5$ million, $$3$ million, and $$4$ million for

years $1,2,$ and $3,$ respectively, on an initial investment in Ecuador of $$22$ million. The firm

projects perpetuity of $$5$ million in years $4$ and beyond. If the required return on this

investment is $17\%,$ how large does the probability of expropriation in year $5$ have to be

before the investment has a negative NPV$?$ Expected compensation in the event of

expropriation is $$3$ million.

a$)31\%$

b$)42\%$

c$)22\%$

d$)49\%$