ATC Has a Value of $98,000 in a Normal Economy

question 1

Multiple Choice

ATC has a value of $98,000 in a normal economy and $87,000 in a recession.The firm has $90,000 of debt.The probability of a recession is 18 percent.The firm is considering a project that would change the firm values to $105,000 in a good economy and $92,000 in a recession.If the firm accepts this project,the firm value will ________ and shareholder value will ________.

• A)decrease by $2,000; decrease by $1,000
• B)increase by $2,000; increase by $2,000
• C)increase by $6,640; increase by $6,100
• D)increase by $12,000; increase by $12,000
• E)increase by $6,640; increase by $6,640

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Definitions:

Perceptual Deficit

A limitation or impairment in the ability to perceive or interpret sensory information correctly.

Attention-Deficit/Hyperactivity Disorder

A condition related to brain development that is marked by a combination of distractibility and/or excessive activity and impulsiveness, which disrupts normal functioning or growth.

Fragile X Syndrome

A genetic condition causing intellectual disability, behavioral and learning challenges, and various physical characteristics.

Trisomy 21

Also known as Down syndrome, a genetic disorder caused by the presence of an extra 21st chromosome.