A firm in the extraction industry whose major assets are cash,equipment and a closed facility may appear to have extraordinary value. This value can be primarily attributed to:
A) the potential sale of the company.
B) the low exercise price held by the shareholders.
C) the option to open the facility when prices rise dramatically.
D) All of these.
E) None of these.

Question

Quizplus · Accepted Answer

The value of the closed facility can only be attributed to the option to open it when prices rise dramatically, indicating that choice C is the correct answer. The other choices, such as the potential sale of the company and the low exercise price held by the shareholders, may contribute to the value of the firm, but they are not directly related to the closed facility's value.

A Firm in the Extraction Industry Whose Major Assets Are