Question
The owner of a pro-football team expects the team to be worth either $270 million next year or $120 million, depending on whether or not
The owner of a pro-football team expects the team to be worth either $270 million next year or $120 million, depending on whether or not she gets the city to build a new stadium. There is a 60 percent chance she will get a new stadium. There is a buyer willing to pay $180 million for the team right now. However, the buyer will keep his offer openuntil the stadium issue is resolvedif offered some form of compensation. If the interest rate is 6 percent, how much should she be willing to pay the potential buyer for a one-year option to sell the team (round to the nearest $1 million)?
A. 0
B.$40 million
C. $42 million
D. $21 million
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