Suppose that the managers at Rearden Metal will increase risk to maximize the expected payoff to equity holders. Of Rearden has $230 million in debt due in one year, then the expected value of Rearden assets are closest to:
A) $900 million
B) $280 million
C) $300 million
D) $295 million

I can say that based on the information provided within the question the expected value of the Rearden assests are close to $295 million. This would be calculated as the following.

Expected Payoff to equity holders w/o increase in risk:

Equity = 1/3($200 - $200) + 1/3($300 - $230) + 1/3($400 - $230) = $70 million

Expected Payoff to equity holders w/increase in risk:

Equity = (50%)($200 - $200) + (5%)($300 - $230) + (45%)($400 - $230) = $80 million

Therefore Rearden's managers will increase the risk and the expected value of Rearden's assets is:

assets= (50%)($200) + (5%)($300) + (45%)($400) = $295 million

I hope this answered your question. If you have any more questions feel free to ask away at Brainly.

Suppose that the managers at Rearden Metal will increase risk to maximize the expected payoff to equity holders. Of Rearden has $230 million in debt due in one year, then the expected value of Rearden assets are closest to: A) $900 million B) $280 million C) $300 million D) $295 million

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Suppose that the managers at Rearden Metal will increase risk to maximize the expected payoff to equity holders. Of Rearden has $230 million in debt due in one year, then the expected value of Rearden assets are closest to:
A) $900 million
B) $280 million
C) $300 million
D) $295 million