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

question 78

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 decide 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 $180 million in debt due in one year,then the expected value of Rearden's assets is closest to:

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

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Definitions:

Postindustrial Period

characterizes the phase in societal development following the peak of industrialization, often marked by a shift towards service-oriented and information-based economies.

Replacement Level

A term used in demography indicating the number of children each woman needs to have to ensure the population size remains constant, typically calculated as slightly over two children per woman.

Fertility Levels

The mean number of offspring a woman has during her life in a certain group of people.

Replacement Level Fertility

The fertility rate at which each new generation precisely replaces itself, without increasing or decreasing the population size.