The Expected Value of Litigation for Both Firms a and B

question 4

Multiple Choice

The expected value of litigation for both firms A and B both is $500,000 in favor of Firm A. The court costs for A and B are $60,000 and $100,000, respectively. Calculate the collective benefit that can be obtained if both firms agree to an out-of-court settlement.

• A) $200,000
• B) $160,000
• C) $500,000
• D) $40,000
• E) $60,000