Brandt Enterprises Is Considering a New Project That Has a Cost

question 5

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

---

Definitions:

Attempted Conciliation

A process where parties in conflict try to reconcile their differences and reach a peaceful resolution.

Superordinate Goal

Refers to shared goals that can only be achieved by cooperation among individuals or groups, often used to reduce conflict.

Cooperative Behavior

Actions and attitudes that are geared towards working together harmoniously for a common benefit or goal.

Muzafer Sherif

A notable social psychologist known for his work on group conflict, social norms, and the formation of social attitudes, particularly through the famous Robbers Cave experiment.