Aplant manager wants to know how much he should be willing to pay for perfect market research. currently there are two states of nature facing his decision to expand or do nothing. under favorable market conditions the manager would make $100,000 for the large plant and $5,000 for the small plant. under unfavorable market conditions the large plant would lose $80,000 and the small plant would make $0. if the two states of nature are equally likely, how much should he pay for perfect information?
a. 55,000b. $25,000c. unable to determine with this informationd. $15,000e. $0

Pennewell publishing inc. (pp) is a zero growth company. it currently has zero debt and its earnings before interest and taxes (ebit) are $80,000. pp's current cost of equity is 10%, and its tax rate is 40%. the firm has 10,000 shares of common stock outstanding selling at a price per share of $48.00. refer to the data for pennewell publishing inc. (pp). pp is considering changing its capital structure to one with 30% debt and 70% equity, based on market values. the debt would have an interest rate of 8%. the new funds would be used to repurchase stock. it is estimated that the increase in risk resulting from the added leverage would cause the required rate of return on equity to rise to 12%. if this plan were carried out, what would be pp's new value of operations? a. $484,359 b. $521,173 c. $584,653 d. $560,748 e. $487,805