Use the Information for the Question(s)below

question 23

Multiple Choice

Use the information for the question(s) below.
Monsters Incorporated (MI) is ready to launch a new product.Depending upon the success of this product,MI will have a value of either $100 million,$150 million,or $191 million,with each outcome being equally likely.The cash flows are unrelated to the state of the economy (i.e.risk from the project is diversifiable) so that the project has a beta of 0 and a cost of capital equal to the risk-free rate,which is currently 5%.Assume that the capital markets are perfect.
-The initial value of MI's equity without leverage is closest to:

• A)$133 million.
• B)$147 million.
• C)$140 million.
• D)$150 million.

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Definitions:

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The act of excluding or ignoring someone from a group or society, often used as a form of social punishment or control.

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A characteristic that involves an exaggerated view of one's own importance, a strong desire for an abnormal amount of attention and praise, and an absence of compassion towards others.

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The social or psychological exclusion of an individual from a group, which can lead to feelings of loneliness and affects mental health.