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e opportunity cost

e opportunity cost

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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John invested $12,000 in the stock of Hyper Cyber. Eight years later, Hyper Cyber's shares reached $125,000, but John held onto the shares in the belief that their price would double in the next five years. Unfortunately, Hyper Cyber did not double. Rather the market value of John's shares today is $4,000. If the shares were sold today and the proceeds invested in another investment, they would likely earn 59%6 per annum. Which of the following tems and values is correct? a. S250,000 is the opportunity cost b. $12,000 is the sunk cost C. $2,000 is the opportunity cost d. $125,000 is the opportunity cost of selling the shares today
Transcribed Image Text:John invested $12,000 in the stock of Hyper Cyber. Eight years later, Hyper Cyber's shares reached $125,000, but John held onto the shares in the belief that their price would double in the next five years. Unfortunately, Hyper Cyber did not double. Rather the market value of John's shares today is $4,000. If the shares were sold today and the proceeds invested in another investment, they would likely earn 59%6 per annum. Which of the following tems and values is correct? a. S250,000 is the opportunity cost b. $12,000 is the sunk cost C. $2,000 is the opportunity cost d. $125,000 is the opportunity cost of selling the shares today
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