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You work for a firm that identifies underperforming companies, buys them, improves their performance and stock price, and then sells them. You believe WeWork, which

You work for a firm that identifies underperforming companies, buys them, improves their performance and stock price, and then sells them. You believe WeWork, which recently filed for Chapter 11 bankruptcy, would be a good acquisition. WeWorks marketing department is mediocre; you believe that if you take over the company, you will increase its value by 75%. However, WeWorks accounting department is very good; it can conceal assets, liabilities, and transactions to a point where the companys true value is hard for outsiders to identify, though insiders know the true value. You think that the companys current value is somewhere between $5 billion and $40 billion, uniformly distributed over this range. The current management will sell the company to you if, and only if, your bid exceeds the true value known to them.\ A. If you bid $40 billion, your bid will be sure to succeed. Is your expected profit positive?\ B. If you bid $15 billion, what is the probability that your bid will succeed? If you succeed\ in buying WeWork, what is its expected potential value under your management? Thus, at\ the point in time when you make your bid of $15 billion, what is your expected profit?\ C. Write a function ?(?) for your expected profit if you bid $? billion for WeWork.\ D. Find, either graphically or mathematically, the value of ? that maximizes ?(?).

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