Question: A plant's present value is $10 million which can increase by either 20% or decrease by 25% per year. The firm has an option that

A plant's present value is \$10 million which can increase by either 20\% or decrease by 25\% per year. The firm has an option that allows them to sell the plant's assets for \$7million on or before 2 years from now. The risk free interest rate is 10\%.

a) What is the value of the option today? Write your answer in $ millions, up to three decimal spaces.

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