Use the Information for the Question(s)below

question 14

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%.
-If you are not awarded the government contract and your sales decrease by 25%,then the value of your plant will be closest to:

• A)-$1 million.
• B)$5 million.
• C)$8 million.
• D)$0.

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Definitions:

Insulin Shock

A severe hypoglycemic condition resulting from an excess of insulin in the bloodstream, leading to symptoms like tremors, confusion, and potential loss of consciousness.

Type 1 Diabetes Mellitus

A chronic condition where the pancreas produces little or no insulin, a hormone needed to allow sugar (glucose) to enter cells to produce energy.

Autoimmune Disease

A condition in which the immune system mistakenly attacks the body's own tissues, resulting in inflammation and tissue damage.

Pancreatic Polypeptide

A hormone produced by the pancreas that helps regulate pancreatic secretions and can influence the liver's storage and use of glucose and fats.