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39. What is the total economic cost (in dollars) of the following transaction? (Compute the cost of the transaction only, not the value of the
39. What is the total economic cost (in dollars) of the following transaction? (Compute the cost of the transaction only, not the value of the asset because you'll eventually be able to sell that). I buy 100 shares of Acme Widget Corp. stock, which I plan to sell one year later. The price of the stock is $20 per share. The brokerage fee is $10 and I had to pay $50 for an online Internet research firm to find the company that best suited my investment needs. I anticipate that during the year I will receive $0.50/share in dividends and the stock price will appreciate to $24 per share. Rather than buy the stock, I could have deposited that money is a savings account earning 1% interest, a money market account earning 2% interest, a CD earning 3% interest or an Acme Widget Corp. bond earning 5% interest. Assume that these alternatives are certain to pay off. You are computing total cost -- not net cost, not profit. Focus only on the economic cost (as opposed to accounting cost)
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