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

---

Definitions:

Sympathetic Nervous System

Part of the autonomic nervous system that activates the body's fight-or-flight response during stressful situations.

Stress Response

The body's way of reacting to a challenge or demand, often characterized by physical, mental, and emotional changes.

Parasympathetic Nervous System

One of the two subdivisions of the autonomic nervous system, responsible for conserving energy and promoting the "rest and digest" response in the body.

Hypothalamus

A brain structure that helps maintain various bodily functions, including eating and hunger.