Use the Information for the Question(s)below

question 105

Multiple Choice

Use the information for the question(s) below.
JR Industries has a $20 million loan due at the end of the year and under its current business strategy its assets will have a market value of only $15 million when the loan comes due.JR is considering a new much riskier business strategy.While this new riskier strategy can be implemented using JR's existing assets without any additional investment,the new strategy has only a 40% probability of succeeding.If the new strategy is a success,the market value of JR's assets will be $30 million,but if the strategy fails the assets will be worth only $5 million.
-What is the expected payoff to equity holders under JR's new riskier business strategy?

• A)$15 million
• B)$11 million
• C)$20 million
• D)$4 million

---

Definitions:

Breast-Feeding

The act of feeding a baby with milk directly from the mother's breast, providing essential nutrients and antibodies.

Cultural Group

A community of individuals who share common cultural practices, linguistic or religious traditions, heritage, or characteristics.

Ju/'hoansi

A hunter-gatherer people living in the Kalahari Desert of southern Africa, known for their rich cultural heritage and foraging lifestyle.

Neolithic Agricultural Villages

Early human settlements that emerged during the Neolithic era, characterized by farming practices, permanent structures, and the development of agricultural technologies.