The Webber Company is an international conglomerate with a real estate divisio

The Webber Company is an international conglomerate with a real estate division that owns the right to erect an office building on a parcel of land
in downtown Sacramento over the next year. This building would cost $20 million to construct. Due to low demand for office space in the downtown
area such a building is worth approximately $18.5 million today. If demand increases the building would be worth $22.4 million a year from today.
If demand decreases the same office building would be worth only $17.5 million in a year. The company can borrow and lend at the risk-free annual
effective rate of 4.8 percent. A local competitor in the real estate business has recently offered $750000 for the right to build an office
building on the land. Should the company accept this offer? Use a two-state model to value the real option.