Use the Information for the Question(s)below

question 14

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 not awarded the government contract and your sales decrease by 25%,then the value of your plant will be closest to:

• A)-$1 million.
• B)$5 million.
• C)$8 million.
• D)$0.

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Definitions:

Innate Potential

A term referring to the natural capabilities and talents that individuals are born with, which can be developed through experiences and education.

Societal Goals

Objectives or aims that are deemed important or beneficial for the society as a whole.

Higher Levels of Intelligence

A state of advanced cognitive ability that includes superior problem-solving skills, faster learning, and the ability to understand complex concepts more easily.

Industriousness

A trait characterized by a persistent and hardworking approach to tasks and goals, often leading to success in endeavors.