Yes, you can add up payoffs. It is basically stacking up lines. The sum total must be

Question:

Yes, you can add up payoffs. It is basically stacking up lines. The sum total must be one diagonal line (i.e., slope of 1)—it is the value of the firm. Perhaps this is easiest to see if you draw it all, and then convince yourself that you can stack!

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question
Question Posted: