ames Sodais a regional soda manufacturer. James is currently facing three lawsuits, summarized below: 1

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A customer is suing James for $1 million because he claims to have found a piece of glass in his soda. Management deems the’ probability that James will lose the lawsuit and have to pay $1 million as reasonably possible. An employee is suing James for $500,000 for an injury she incurred in the parking lot while walking to work. Management deems the’ probability that James will lose the lawsuit as probable but eslimates that a reasonable payout will be $100,000, not $500,000. A customer is suing James for $300,000 because her last name is James and she claims James stole her name. Management deems’ the probability that James will lose the lawsuit and have to pay $300,000 as remote.

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