You have recently learned that the company where you work is being sold for $500,000. The company's income statement indicates current profits of $15,000, which has yet to be paid out as dividends. If the company is a 'going concern' indefinitely and profits are assumed to grow at a rate of 3%, what is the assumed opportunity cost of funds?
You have recently learned that the company where you work is being sold for $500,000. The company's income statement indicates current profits of $15,000, which has yet to be paid out as dividends. If the company is a 'going concern' indefinitely and profits are assumed to grow at a rate of 3%, what is the assumed opportunity cost of funds?
Brief Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN:9781337091985
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter9: The Basic Tools Of Finance
Section: Chapter Questions
Problem 3CQQ
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