Use the Information for the Question(s)below

question 43

Multiple Choice

Use the information for the question(s) below.
If it is managed efficiently,Luther Industries will have assets with market value of $100 million,$300,million,or $500 million next year,with each outcome being equally likely.Managers may,however,engage in wasteful empire building which will reduce the firm's market value by $20 million in all cases.Managers may also increase the risk of the firm,changing the probability of each outcome to 50%,20%,and 30% respectively.
-If its managers increase the risk of the firm,then the expected market value of Luther's assets is closest to:

• A)$260 million.
• B)$240 million.
• C)$300 million.
• D)$280 million.

---

Definitions:

Unsalable Inventory

Products that cannot be sold due to lack of demand, damage, or obsolescence.

Refund

A refund is the return of money to a purchaser following dissatisfaction with goods or services bought.

Packaging Process

The method and materials used to wrap or protect goods for distribution, storage, sale, and use.

Dishonest

Lacking integrity or honesty; engaging in fraudulent or deceitful behaviors.