During 20X8, Zac Entity (ZE) purchases a call option on Astron Entity (AE) shares for a premium of $10,000. The call option gives ZE the right to purchase 1,000 AE shares for the strike price of $50 per share. At the end of 20X8, the market price of AE shares is $45 per share. How much will ZE pay if it wants to purchase 100 AE shares?

a. $500

b. $4,500

c. $5,000

d. $10,000.

Castle Company purchases a financial asset for $10,000. The asset is not purchased under normal market terms, and there is no information regarding the fair value of the asset. The asset is estimated to provide future cash receipts of $2,000 per year for the next ten years. The interest rate for similar instruments is 8%. What value should the financial asset be recorded at on Castle Companys books?

$0, because there is no determinable fair value.

$10,000

$11,380

$13,420

$20,000