1. Two private companies, Charles Limited and Anna Limited, each have 5 shareholders, say, Shareholders A, B, C, D and E. Shareholders of Charles Limited have equal shareholding (i.e., 20 shares each). Shareholders I, II, III, IV and V of Anna Limited hold 50 shares, 44 shares, 3 shares, 2 shares and 1 share respectively. Each of the companies is worth $100 million. Now, Shareholder A of Charles Limited wants to transfer 1 share out of the 20 shares he holds to one of the existing shareholders. Coincidentally, Shareholder I of Anna Limited wants to dispose 1 share out of the 20 shares he holds. All the other shareholders (i.e., II, III, IV and V) are interested. In both cases, the disposition should be at a fair (justifiable) value. It is assumed that shareholder who acquires the share in either case will pay a price that they consider fair.

a) What should be the value of the Charles Limited share to each of the other shareholders? Briefly explain? b) What should be the value of the North Limited share to each of the other shareholders? Briefly explain?

2. ABC company plans to enter the China market with either Product A, Product B, or both. CT company, a China based company and a producer of Product A as well, will respond, depending on ABC company decision. The scenarios are as follows: - If ABC company decides to proceed with Product A, CT company will either maintain the status quo, expand its production capacity, or lowering the price. The respective payoffs of ABC company and CT company are (20, 8), (6, 17), and (9, 15). - If ABC company decides to proceed with Product B, CT companys strategy space remains unchanged and the payoffs become(25, 9), (80, 15), and (14, 40), respectively. - If ABC company decides to proceed with both products, CT companys strategy space will also remain unchanged and the payoffs become (22, 35), (32, 12), and (58, 37), respectively.

a) Represent this game with a game tree and find out the expected outcome. b) Briefly explain your solution process.