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The Expected Value of Litigation for Both Firms a and B

Question 4

Multiple Choice

The expected value of litigation for both firms A and B both is $500,000 in favor of Firm A. The court costs for A and B are $60,000 and $100,000, respectively. Calculate the collective benefit that can be obtained if both firms agree to an out-of-court settlement.


A) $200,000
B) $160,000
C) $500,000
D) $40,000
E) $60,000

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