If you require a risk premium of 10 how much will you be, Financial Management

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If you require a risk premium of 10 how much will you be

Consider a risky portfolio. The end-of-year cash flow derived from the portfolio will be either $50,000 or $150,000, with equal probabilities of .5. The alternative riskless investment in T-bills pays 5%.

a. If you require a risk premium of 10%, how much will you be willing to pay for the portfolio? (Round your answer to the nearest dollar amount.)

Value of the portfolio $________________ (Note answer is not $100,000)

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