Vasanth, an enthusiastic entrepreneur, has just launched DATown.com as an online social network. For funding, Vasanth approached Somik, an aspiring venture capitalist. Somik believes that Vasanth's...

Vasanth, an enthusiastic entrepreneur, has just launched DATown.com as an online social network. For funding, Vasanth approached Somik, an aspiring venture capitalist. Somik believes that Vasanth's site needs an investment of $12 M to be fully functional. If DATown succeeds, Somik's stake in the company will be worth $100 M, but if it fails, he will get nothing. Somik believes that DATown has a 1 in 4 chance of success. Somik asks you to advise him with this decision. You assess his risk attitude and find that he follows the delta property and that he has a risk tolerance of $200 M.