Use the Information for the Question(s)below

question 35

Multiple Choice

Use the information for the question(s) below.
You own a small manufacturing plant that currently generates revenues of $2 million per year.Next year,based upon a decision on a long-term government contract,your revenues will either increase by 20% or decrease by 25%,with equal probability,and stay at that level as long as you operate the plant.Other costs run $1.6 million per year.You can sell the plant at any time to a large conglomerate for $5 million and your cost of capital is 10%.
-Assume that you are not able to sell the plant,but you are able to shut down the plant at no cost at any time.Given the embedded option to abandon production,the value of your plant will be closest to:

• A)$8.0 million.
• B)$4.0 million.
• C)$5.0 million.
• D)$6.5 million.

Differentiate between vertical specialization, chain of command, and span of control.

Explain horizontal specialization and its forms.

Understand environmental complexity and how it impacts organizations.

Understand the key legal concepts involved in resolving disputes over debt payments, including the difference between liquidated and unliquidated debts, and accord and satisfaction.

---

Definitions:

Discounted Note

A promissory note sold for less than its face value that will be worth its full value upon maturity.

Interest Calculations

The process of determining the interest amount payable or receivable over a certain period based on the principal sum and the rate of interest.

Journalize

The process of recording financial transactions in a company's journal before posting them to the general ledger.

Social Security Tax

A tax levied on both employers and employees to fund the Social Security program, which provides benefits for retirees, disabled workers, and survivors.