Use the Information for the Question(s)below

question 7

Multiple Choice

Use the information for the question(s) below.
You own a small manufacturing plant that currently generates revenues of $2 million per year.Next year,based upon a decision on a long-term government contract,your revenues will either increase by 20% or decrease by 25%,with equal probability,and stay at that level as long as you operate the plant.Other costs run $1.6 million per year.You can sell the plant at any time to a large conglomerate for $5 million and your cost of capital is 10%.
-If you are awarded the government contract and your sales increase by 20%,then the value of your plant will be closest to:

• A)$5 million.
• B)$8 million.
• C)$0.
• D)$4 million.

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Definitions:

Abstract Institutions

Abstract Institutions are conceptual frameworks or societal constructs that represent organized principles of social order, not tangible entities.

Durkheim's View

Refers to Emile Durkheim's perspective in sociology that emphasizes the importance of social facts, collective consciousness, and the societal origins of behavior.

Society Expectations

The collective norms and ideals that a society holds regarding the behavior and roles of its members.

Internalize

The process by which individuals adopt the views, attitudes, or standards of others as their own, often unconsciously.