Suppose the Oil Price Is Uncertain and Can Be $60/bbl

question 25

Multiple Choice

Suppose the oil price is uncertain and can be $60/bbl or $30/bbl next year with equal probability, then the value of the option to postpone the project by one year is:

• A) +34 million
• B) +25 million
• C) +59 million
• D) None of the above

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Definitions:

Voluntary Dissolution

It refers to the process by which a corporation's stakeholders decide to formally and legally end the corporation's existence.

Directors

Shareholders select individuals to monitor the management and decide on key issues for a corporation.

Shareholders

Individuals or entities that own share(s) in a corporation, granting them certain rights like receiving dividends and voting at shareholders' meetings.

Hostile Takeover

An acquisition attempt by a company or individual to obtain control of another company against the wishes of the target company's management and board of directors.