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3 years ago

What is an opportunty cost?

2 answers:

7 0

The loss of potential gain from other alternatives when one alternative is chosen: "idle cash balances represent an opportunity cost in terms of lost interest"

Virty [35]3 years ago

4 0

The definition of Opportunity cost is - The loss of potential gain from other alternatives when one is chosen.

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An all-equity firm is considering the following projects:

lakkis [162]

Answer:

A. Compared with the firm's 12 percent cost of capital, Project W has a_______expected return.

a. lower

1. Project X has a______expected return.

b. lower

2. Project Y has a_______expected return

b. higher

3. Project Z has a______expected return.

a. higher

B. Project W should be_______.

b. rejected

1. Project X should be______.

b. rejected

2. Project Y should be_______.

a. accepted

3. Project Z should be_______.

a. accepted

c. If the firm's overall cost of capital were used as a hurdle rate, Project W would be_______.

c. correctly rejected

1. Project X would be______.

c. correctly rejected

2. Project Y would be_______.

b. correctly accepted

3. Project Z would be________.

b. correctly rejected

Explanation:

Project Beta IRR <u> expected return</u>

W .62 9.2% = 5% + (0.62 x 7%) = 9.34%

X .77 10.3 % = 5% + (0.77 x 7%) = 10.39%

Y 1.27 14.1 % = 5% + (1.27 x 7%) = 13.89%

Z 1.42 17.0% = 5% + (1.42 x 7%) = 14.94%

8 0

2 years ago

Calculate the price of a two-year bond with a face value of $100, a coupon rate of 5%, and a yield-to-maturity of 5%.

aalyn [17]

The price of the bond is $100.

The bond's price is the present value of the face value plus the present value of the interest accrued throughout the bond's term.

The coupon interest rate is 5% of 100, that is $5 per year. The yield to maturity is also 5%. Because the coupon rate is equal to the yield, the bond's present value will only be its face value.

Present value = 5(P/A, 5%, 2) + 100(P/F, 5%, 2)

= 5×1.85941+ 100×0.90703

= 100

Therefore, the price of the bond is $100.

To know more about price of the bond click here:

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6 0

2 years ago

On December 15, 2021, Rigsby Sales Co. sold a tract of land that cost $3,300,000 four $5,000,000. Rigsby appropriately uses the

Flura [38]

<u>Solution and Explanation:</u>

Installment Receivables (Net) of $2,905,600

Basis Particulars Debit Credit

Sale:- Instalment Receivables $5,000,000

Inventory $3,200,000

Deferred gross profit $1,800,000

Payment:- Cash $4,90,000

Instalment Receivables $4,90,000

Deferred Gross profit $165,600

Realised Gross profit $165,600

Instalment Receivables ($5,000,000 minus $490,000) = $4,510,000

Deferred gross profit ($1,800,000 minus $165,600) = $1,634,400

Instalment Receivables (Net) = $2,875,600

8 0

3 years ago

The classic quote from the movie Field of Dreams, "If you build (produce] it

-BARSIC- [3]

The correct answer is A. Say's Law

Explanation:

Say's Law proposed by the economist Jean-Baptiste Say establishes the supply (availability of a product) or the production itself is the factor that creates demand (customers willing to buy the product). For example, the production of a new model of cellphone or computer makes people want to buy the new model. This idea is expressed by the quote "If you build (produce] it they will come [purchase]" because in the quote it is explained the production of something make people go to buy that product.

6 0

2 years ago

John is a journalist. He went to a product demonstration for a new computer. Some of what he heard was informative, while the re

yan [13]

The two sentences meant to persuade are the following: "This is something no other computer can do at present. This is the best buy on the market." These two sentences definitely compel the customers to buy or at least want to buy the item. The other sentences merely provide information to the customers but aren't decisive or directly decisive in the buyer's decision making.

8 0

3 years ago

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