Use the Information for the Question(s)below

question 60

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.The value of the option to abandon production will be closest to:

• A)$1.0 million.
• B)$0.5 million.
• C)-$1.0 million.
• D)$3.0 million.

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Definitions:

Social Behaviors

Actions or reactions of individuals in relation to the social environment, including interactions with others and adherence to societal norms.

Preschool

An educational establishment offering early childhood education to children before they begin compulsory education at primary school.

Family Configurations

The various structural forms a family might take, including nuclear, extended, single-parent, blended, or other arrangements.

Cultures

The social behavior, norms, knowledge, beliefs, arts, laws, customs, capabilities, and habits of the individuals in these groups.