Global Foundries (GF), a privately held company that invests in companies producing essential components for high-volume data storage, is valued at $4.0 billion dollars. A computer company that wants to get into cloud computing is considering the purchase of GF, but because of the uncertain economy, it would prefer to purchase an option that will allow it to buy the company for up to 1 year from now at a cost of $4.3 billion. What is the maximum amount the company should be willing to pay for the option if its MARR is 9% per year?
Global Foundries (GF), a privately held company that invests in companies producing essential components for high-volume data storage, is valued at $4.0 billion dollars. A computer company that wants to get into cloud computing is considering the purchase of GF, but because of the uncertain economy, it would prefer to purchase an option that will allow it to buy the company for up to 1 year from now at a cost of $4.3 billion. What is the maximum amount the company should be willing to pay for the option if its MARR is 9% per year?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Global Foundries (GF), a privately held company
that invests in companies producing essential
components for high-volume data storage, is valued
at $4.0 billion dollars. A computer company
that wants to get into cloud computing is considering
the purchase of GF, but because of the uncertain
economy, it would prefer to purchase an
option that will allow it to buy the company for
up to 1 year from now at a cost of $4.3 billion.
What is the maximum amount the company
should be willing to pay for the option if its
MARR is 9% per year?
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