A Factory Currently Produces Output That Sells for $125 Million

question 47

Multiple Choice

A factory currently produces output that sells for $125 million. Production costs are $100 million. Each year it is equally likely that the selling price of the output will be 25% higher or
30% lower. Assume the cost of capital is zero and that it will cost nothing to close the plant or
To reopen it. What is the present value of this factory if it exists for 2 years?

• A)$41.80
• B)$56.64
• C)$36.35
• D)$57.73

Recognize the importance of lowering trade barriers for developing countries' products.

Identify methods of reducing the income gap between countries.

Analyze factors inversely related to per capita income.

Calculate changes in per capita income and understand its implications.

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Definitions:

Distal Tubule

Part of the nephron in the kidney responsible for the reabsorption of ions, water, and nutrients.

Ascending Limb

A segment of the loop of Henle in the kidney, involved in the reabsorption of water and solutes during urine formation.

Vertebrate Body

The physical structure of animals with backbones, characterized by a segmented spinal column and a complex skeletal structure.

Peripheral Blood Vessels

The vessels in the circulatory system that carry blood to and from the heart and to the extremities of the body.