Use the Following Information to Answer the Question(s)below

question 86

Multiple Choice

Use the following information to answer the question(s) below.
Suppose that you have received two job offers.Rearden Metal offers you a contract for $75,000 per year for the next two years while Wyatt Oil offers you a contract for $90,000 per year for the next two years.Both jobs are equivalent.Suppose that Rearden Metal's contract is certain,but Wyatt Oil has a 60% chance of going bankrupt at the end of the year.In the event that Wyatt Oil files for bankruptcy,it will cancel your contract and pay you the lowest amount possible for you to not quit.If you do quit,you expect you could find a new job paying $75,000 per year,but you would be unemployed for four months while searching for this new job.
-Assuming your cost of capital is 6 percent,the present value of your expected wage if you accept Wyatt Oil's offer is closest to:

• A)$138,000.
• B)$140,000.
• C)$144,000.
• D)$150,000.

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Definitions:

Mobility

Person's ability to move about freely.

Analgesic Medication

Medications formulated to alleviate pain without leading to unconsciousness.

Drainage

The natural or artificial removal of surface and sub-surface water from an area, or the process of removing fluid from a body cavity or wound.

Evacuator

A device or person involved in the removal of something undesirable, such as surgical smoke or hazardous waste.