An Analyst Computes the Intrinsic Values and Probabilities for Each

question 1

Multiple Choice

An analyst computes the intrinsic values and probabilities for each of the indicated scenarios in the following table.Determine the expected value per share. $$\begin{array} { | l | l | l | l | } \hline \text { Scenario } & \begin{array} { l } \text { Intrinsic value } \\\text { (millions) }\end{array} & \text { Probability } & \\\hline \begin{array} { l } \text { Success in both domestic } \\\text { and international markets }\end{array} & 1200 & 0.4 & \\\hline \text { Success in domestic market only. } & 600 & 0.2 & \\\hline \text { Success in int emational market only. } & 800 & 0.3 & \\\hline \text { Failure in both markets } & 0 & 0.1 & \\\hline { \text { Expected intrinsic value (millions) : } } & \\\hline \text { Shares outsta nding } 50 \text { million } & \text { Expected share price } & \\\hline\end{array}$$

• A)13.00
• B)16.00
• C)16.80
• D)17.50

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Definitions:

Grouping Work Positions

The process of organizing jobs and responsibilities within a company into specific categories or departments to streamline operations.

Functional Structure

An organizational design that groups employees by their similar specializations, roles, or tasks.

Top Management Group

Consists of the highest-level executives in an organization who are responsible for strategic decisions and overall direction.

Vice Presidents

High-ranking executives in a corporation who oversee specific departments or divisions, reporting directly to the president or CEO.