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Harvey quit his job at State University where he earned $45,000 a year. He Figures his entrepreneurial talent or Foregone entrepreneurial income to be Vear To start the b ucinecc be

Harvey quit his job at State University where he earned $45,000 a year. He Figures his entrepreneurial talent or Foregone entrepreneurial income to be Vear To start the b ucinecc be

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Harvey quit his job at State University where he earned $45,000 a year. He figures his entrepreneurial talent or foregone entrepreneurial income to be $5,000 a year. To start the business, he cashed in $100,000 in bonds that earned 10 percent interest annually to buy a software company, Extreme Gaming. In the first year, the firm sold 11,000 units of software at $75 for each unit. Of the $75 per unit, $55 goes for the costs of production, packaging, marketing, employee wages and benefits, and rent on a building. Refer to the above information. The cost of capital for Harvey in the first year is: Group of answer choices A) $10,000 B) Not enough information C) $110,000 D) $100,000 E) There is $0 cost of capital associated with Harvey's new business
Transcribed Image Text:Harvey quit his job at State University where he earned $45,000 a year. He figures his entrepreneurial talent or foregone entrepreneurial income to be $5,000 a year. To start the business, he cashed in $100,000 in bonds that earned 10 percent interest annually to buy a software company, Extreme Gaming. In the first year, the firm sold 11,000 units of software at $75 for each unit. Of the $75 per unit, $55 goes for the costs of production, packaging, marketing, employee wages and benefits, and rent on a building. Refer to the above information. The cost of capital for Harvey in the first year is: Group of answer choices A) $10,000 B) Not enough information C) $110,000 D) $100,000 E) There is $0 cost of capital associated with Harvey's new business
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