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You are currently operating a tomato farm in Bulgaria. You are worried that you might be...

You are currently operating a tomato farm in Bulgaria. You are worried that you might be pressured to sell your farm for $1 to the local Bulgarian mafia boss during the next 2 years. If that happens you can file a claim with an insurance company and receive $100M. If the mafia boss leaves you in peace the business will be worth 400M in 2 years. A wealthy Russian has just offered you $160M for the farm. The cost of capital for the project is 16%. Should you sell now? (please include a decision tree to illustrate your reasoning).

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ANSWER IN THE IMAGE ((YELLOW HIGHLIGHTED). FEEL FREE TO ASK ANY DOUBTS. THUMBS UP PLEASE.

jeff jeffy answered 2 years ago
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