Information is power. Withholding or distorting project information is aviable and potentially useful approach to increase power
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The implicit cost is $61,000.
<h3>What is the implicit cost?</h3>Implicit cost is the cost of the next best option forgone when one alternative is chosen over other alternatives.
When you decide to start the business, you forgo the amount you earned from your job and the interest you were earning.
$60,000 + 1,000 = $61,000
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Answer:
The offer at $4.60 by the broker is higher than the calculated fair value of $4.545 hence i will not take up his offer
Explanation:
Given data:
stock A = $100 at t = 0
in two worlds : good scenario ; stock A = $120
bad scenario ; stock A = $70
probability = 0.5
annual risk less rate = 10% = 0.1
To determine if to take the offer or not we have to calculate the call option using the given parameters
Cu = = $4.545
The offer at $4.60 by the broker is higher than the calculated fair value of $4.545 hence i will not take up his offer