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 the above.
E)None of the above.

Question

Quizplus · Accepted Answer

The value of the firm's assets is primarily due to the option to open the facility when prices rise dramatically. The potential sale of the company or the low exercise price held by shareholders may also contribute to its value but are not the primary reasons for its extraordinary value.

A Firm in the Extraction Industry Whose Major Assets Are