What was the opportunity cost of keeping it on display

Assignment Help Financial Management

Reference no: EM131822486

In the summer of 2008, at Heathrow airport in London, Bestofthebest (BB), a private company, offered a lottery to win a Ferrari or 107,000 British pounds, equivalent at the time to about $214,000. Both the Ferrari and the money, in 100 pound notes, were on display. If the U.K. interest rate was 4 % per year, and the dollar interest rate was 2 % per year (EARs), how much did it cost the company in dollars each month to keep the cash on display? That is, what was the opportunity cost of keeping it on display rather than in a bank account? (Ignore taxes.)

The opportunity cost of keeping it on display rather than in a bank account is pound per month.

Reference no: EM131822486

Questions Cloud

Tax status and expectations theory : Assume that as of today the one-year annualized rate of a security is 4.0%, the two-year rate is 6.0%, and the three-year rate is 7.0%.

What is the IRR of this investment opportunity : You are considering an investment in a clothes distributer. What is the IRR of this investment opportunity?

Compute earnings per share and the P-E ratio : Compute earnings per share and the P/E ratio for 20X2. Compute earnings per share and the P/E ratio for 20X1.

Determine the maximum deviation allowable in the cost : Calculate the IRR and use it to determine the maximum deviation allowable in the cost of capital estimate to leave the decision unchanged. The IRR is %.

What was the opportunity cost of keeping it on display : what was the opportunity cost of keeping it on display rather than in a bank account?

Npv analysis of the project and recommend whether project : Prepare a detailed NPV analysis of the project and recommend whether the project should go ahead or not.

Find the black-scholes price of an at-the-money : Find the Black-Scholes price of an at-the-money 1-year euro-denominated dollar put.

What is ann annualized irr from mortgage : Assuming Ann makes payments for 2 years before she sells the house and pays the bank the balance, what is Ann’s annualized IRR from mortgage A?

Calculate fair price for this bond today : Calculate a fair price for this bond today. calculate what the price should be 3 years from now.

User Account

All Pages