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If managed effectively, Rearden Metal will have assets with a market value of $200 million, $300 million, or $400 million next year, with each outcome being equally likely. Managers, however, may decided to engage in wasteful empire building, which will reduce Rearden's market value by $20 million in all cases. Managers may also increase the risk of the firm, changing the probability of each outcome to 50%, 5%, and 45% respectively.
-Suppose that the managers at Rearden Metal will increase risk to maximize the expected payoff to equity holders.If Rearden has $180 million in debt due in one year,then the expected value of Rearden's assets are closest to:
Transition to Parenthood
The phase individuals or couples go through as they adjust to the new role of being parents.
Relationship Satisfaction
The extent to which partners in a romantic relationship feel content and fulfilled with their partnership and each other.
Personality Development
The continual process through which individuals develop unique patterns of feeling, thinking, and behaving over the course of their lifetime.
Self-indulgent
The tendency to allow oneself excessive pleasure or luxury, often ignoring potential negative consequences.
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