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Suppose you believe a company could be worth any value between $10 million and 5110 million with equal probability (i.e. its value is uniformly distributed
Suppose you believe a company could be worth any value between $10 million and 5110 million with equal probability (i.e. its value is uniformly distributed between $10 million and $110 million). If you ran it, you would be able to increase its value by 75%. Its true value is known with certainty by its current owners and they will sell it to you if and only if your bid exceeds the true value. a. What is your expect profit from bidding $110 million? (Hint: you will win with probability 1.]
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