Use the Following Information to Answer the Question(s)below

question 5

Multiple Choice

Use the following information to answer the question(s) below.
Suppose that you have received two job offers.Rearden Metal offers you a contract for $75,000 per year for the next two years while Wyatt Oil offers you a contract for $90,000 per year for the next two years.Both jobs are equivalent.Suppose that Rearden Metal's contract is certain,but Wyatt Oil has a 60% chance of going bankrupt at the end of the year.In the event that Wyatt Oil files for bankruptcy,it will cancel your contract and pay you the lowest amount possible for you to not quit.If you do quit,you expect you could find a new job paying $75,000 per year,but you would be unemployed for four months while searching for this new job.
-Assuming your cost of capital is 6 percent,the present value of your expected wage if you accept Rearden Metal's offer is closest to:

• A)$133,000.
• B)$138,000.
• C)$140,000.
• D)$144,000.

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Definitions:

Inventory Purchases

The buying of goods to be sold in the normal course of business operations.

Sustainable Income

Revenue that can be maintained for the foreseeable future without diminishing resources or opportunities.

Extraordinary Items

Events and transactions that are distinguished by their uncommon nature and by the infrequency of their occurrence, impacting a company's financial statements.

Continuing Operations

The parts of a business expected to continue operating into the foreseeable future, excluding discontinued operations.