Brandt Enterprises Is Considering a New Project That Has a Cost

question 23

Multiple Choice

Brandt Enterprises is considering a new project that has a cost of $1,000,000, and the CFO set up the following simple decision tree to show its three most likely scenarios. The firm could arrange with its work force and suppliers to cease operations at the end of Year 1 should it choose to do so, but to obtain this abandonment option, it would have to make a payment to those parties. How much is the option to abandon worth to the firm?

• A) $55.08
• B) $57.98
• C) $61.03
• D) $64.08
• E) $67.29

---

Definitions:

UnityPoint Health

A network of hospitals, clinics, and home care services in Iowa, Illinois, and Wisconsin providing patient-centered healthcare.

Data

Information that has been translated into a form that is efficient for movement or processing, encompassing facts, figures, and statistics used for calculation or reasoning.

Super Wi-Fi

An enhanced version of Wi-Fi that uses lower frequency bands to offer longer range and penetration through obstacles.

Medium-range

Referring to a distance, time, or scale that is in between the shortest and longest extremes; often used in the context of planning or products.