Use the Information for the Question(s)below

question 18

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% chance 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 expected payoff to debt holders with the speculative oil lease deal?

• A)$10 million
• B)$275 million
• C)$85 million
• D)$160 million

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Definitions:

Auscultate

The act of listening to the sounds made by the internal organs of the body, typically with a stethoscope, as part of a medical examination.

Chest Radiograph

An X-ray image of the chest used to evaluate the lungs, heart, and chest wall.

Do-not-resuscitate Order

A medical order to withhold cardiopulmonary resuscitation (CPR) or advanced cardiac life support (ACLS) in the event of cardiac or respiratory arrest.

Airway Obstruction

A blockage in the breathing passages that can be partial or complete, posing a serious risk to the affected individual.