Question
Use the following information to answer the questions below. If it is managed efficiently, Food-Finder will have a possible market value of firm as $100
Use the following information to answer the questions below. If it is managed efficiently, Food-Finder will have a possible market value of firm as $100 million, $300, million, or $500 million next year, with each outcome being equally likely. However, managers may engage in wasteful empire building (such as taking luxurious business trips or renovation of their offices with expensive furniture) which will reduce the firm's market value by $20 million in all cases. On the other hand, managers may increase the risk of the firm, changing the probability of each outcome to 50%, 20%, and 30% respectively. If it is managed efficiently, then the expected market firm value of Food-Finder is closest to: A.$240 million B.$280 million C.$300 million D.$260 million
If its managers engage in empire building, then the expected market firm value of Food-Finder is closest to: A.$280 million B.$240 million C.$300 million D.$260 million
If its managers increase the risk of the firm, but without engaging in empire building, then the expected market firm value of Food-Finder is closest to: A.$300 million B.$280 million C.$240 million D.$260 million
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