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

question 61

Multiple Choice

Use the following information to answer the question(s) below.
If managed effectively, Rearden Metal will have assets with a market value of $200 million, $300 million, or $400 million next year, with each outcome being equally likely. Managers, however, may decided to engage in wasteful empire building, which will reduce Rearden's market value by $20 million in all cases. Managers may also increase the risk of the firm, changing the probability of each outcome to 50%, 5%, and 45% respectively.
-Suppose that the managers at Rearden Metal will engage in empire building unless that behavior increases the likelihood of bankruptcy.If Rearden has $190 million in debt due in one year,then the expected value of Rearden's assets are closest to:

• A) $265 million
• B) $280 million
• C) $295 million
• D) $300 million

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Definitions:

Heteronormativity

A cultural bias favoring heterosexual relationships and identities, often marginalizing those who do not fit into this norm.

Binary Categories

Conceptual divisions based on two mutually exclusive and opposite classifications, such as male/female or true/false, often criticized for oversimplification.

Essentialists

Philosophers or theorists who believe in the intrinsic, fundamental nature of entities.

Reproductive Advantage

The evolutionary benefit that certain individuals or traits have over others, leading to a greater likelihood of survival and reproduction.