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Use the Information for the Question(s)below

question 86

Multiple Choice

Use the information for the question(s) below.
Wildcat Drilling is an oil and gas exploration company that is currently operating two active oil fields with a market value of $200 million each.Unfortunately,Wildcat Drilling has $500 million in debt coming due at the end of the year.A large oil company has offered Wildcat drilling a highly speculative,but potentially very valuable,oil and gas lease in exchange for one of their active oil fields.If Wildcat accepts the trade,there is a 10% chance that Wildcat will discover a major new oil field that would be worth $1.2 billion,a 15% that Wildcat will discover a productive oil field that would be worth $600 million,and a 75% chance that Wildcat will not discover oil at all.
-What is the overall expected payoff to Wildcat from the speculative oil lease deal?

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Definitions:

Punitive Damages

Compensation awarded to a plaintiff that goes beyond reimbursement for actual losses and is imposed to punish the defendant and deter such conduct in the future. Also called exemplary damages.

Compensatory Damages

Money awarded to a plaintiff as reimbursement for her or his losses; based on the amount of actual damage or harm to property, lost wages or profits, pain and suffering, medical expenses, disability, etc.

Breach of Contract

The failure to perform an obligation or promise specified in a contract, which can lead to legal action by the injured party for damages or enforcement.

Landlord's Consent

Landlord's consent is the approval a landlord must give for certain actions by the tenant, such as alterations to the property or subletting.