You are trying to determine if your company should cancel or continue leasing the corporate headquarters. You are concerned that there may be more lockdowns due to the pandemic. Based on recent trends, the probability of more lockdowns is $51\%.$ But the company wants to make sure before they pay the $$1$M fee to cancel the lease. You have hired a consultant to help you make the decision. The consultant has a good but imperfect track record $($see table below$).$ What will be your recommendation based on the forecast from the consultant? The NPV for the annual lease is $$2$M$.$ The risk premium is $$1\mathrm{.}5$M with a risk tolerance of $$500,000.$

Forecast

More Lockdowns

No Lockdowns

"More Lockdowns"

$80\%$

$"$No Lockdowns"

$90\%$

Cancel the lease because there is a $51\%$ chance for more lockdowns.

Cancel the lease because the consultant$$s forecast is $54\%$ for more Lockdowns.

Cancel the lease because the consultant$$s forecast is $80\%$ for more Lockdowns.

Don$$t cancel the lease because the consultant$$s forecast is $90\%$ no Lockdowns

Don$$t cancel the lease because the consultant$$s forecast is $46\%$ for more Lockdowns.

Cancel the lease because the NPV is greater than the cancelation fee.