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QUESTION
ATC has a value of $98,000 in a normal economy and $87,000 in a recession. The firm has $90,000 of debt. The probability of a recession is 18 percent....
ATC has a value of $98,000 in a normal economy and $87,000 in a recession. The firm has $90,000 of debt. The probability of a recession is 18 percent. The firm is considering a project that would change the firm values to $105,000 in a good economy and $92,000 in a recession. If the firm accepts this project, the firm value will ______ and shareholder value will ______.
Multiple Choice
- decrease by $2,000; decrease by $1,000
- increase by $2,000; increase by $2,000
- increase by $6,640; increase by $6,100
- increase by $12,000; increase by $12,000
- increase by $6,640; increase by $6,640
