Brandt Enterprises Is Considering a New Project That Has a Cost

question 58

Multiple Choice

Brandt Enterprises is considering a new project that has a cost of $1,000,000,and the CFO set up the following simple decision tree to show its three most likely scenarios.The firm could arrange with its work force and suppliers to cease operations at the end of Year 1 should it choose to do so,but to obtain this abandonment option,it would have to make a payment to those parties.How much is the option to abandon worth to the firm?

• A) $55.08
• B) $57.98
• C) $61.03
• D) $64.08
• E) $67.29

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Definitions:

Fraudulently

Acting with intentional deception or dishonesty to gain an unauthorized benefit or to harm another party.

Forgery

The crime of creating, altering, or imitating objects, statistics, or documents with the intent to deceive.

Public Order Crime

Offenses that interfere with the operation of society and the ability of people to function efficiently, such as public drunkenness and prostitution.

Illegal Drug Use

The use of drugs that are prohibited by law, including substances without a prescription or drugs banned by legislation.