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:

Self-esteem

Refers to a person’s overall sense of self-worth or personal value.

Defense Mechanisms

Psychological strategies brought into play by the unconscious mind to manipulate, deny, or distort reality in order to defend against feelings of anxiety and unacceptable impulses.

Diathesis-stress Model

An approach in psychology that attributes conduct to an innate vulnerability compounded by stressors encountered in one’s life experiences.

Depressed State

A condition or mood of feeling sad, helpless, and dispirited, often with a lack of energy and difficulty in maintaining daily activities.