Dan faces the option to sell his small seafood company to an interested bidder.Assume that if he stays in business for another year,his company will be worth $5 million with 0.7 probability,and $0.5 million with 0.3 probability.If Dan chooses to accept an offer of $2 million for his company,rather than going with the gamble of another year with the company,then what is the risk premium?

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The Answer of Dan faces the option to sell his small seafood company to an interested bidder.Assume that if he stays in business for another year,his company will be worth $5 million with 0.7 probability,and $0.5 million with 0.3 probability.If Dan chooses to accept an offer of $2 million for his company,rather than going with the gamble of another year with the company,then what is the risk premium?

Dan Faces the Option to Sell His Small Seafood Company