You own a small manufacturing plant that currently generates revenues of 2 million

per year. Next year, based upon a decision on a long-term government contract, your

revenues will either increase by 20% or decrease by 25%, with equal probability, and

stay at that level as long as you operate the plant. Other costs run to 1.6 million per

year. You can sell the plant at any time to a large conglomerate for 5 million and

your cost of capital is 10%. What is the value of the option to sell the plant?