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

question 31

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 an 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) $138,000
• B) $140,000
• C) $144,000
• D) $150,000

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Definitions:

Modern Management Theorists

Scholars and practitioners who contribute to the contemporary principles and practices of managing organizations, focusing on changes driven by technology, globalization, and human behavior.

Formal Rules

Explicit, codified regulations or guidelines that govern behavior, operations, or procedures within an organization or system.

Weber

Refers to Max Weber, a German sociologist, known for his work on the bureaucratic model of organization, social stratification, and the study of religion and capitalism.

Bureaucratic Organization

A structured, formalized organizational form that relies on a fixed hierarchy of authority, formal rules and procedures, and a clear division of labor.