Question
Opportunity cost. Mr. Zahid received Rs. 1,000,000 as his gratuity at the time of retirement. He is considering to invest the money in some profitable
Opportunity cost. Mr. Zahid received Rs. 1,000,000 as his gratuity at the time of retirement. He is considering to invest the money in some profitable avenue. While going through Friday newspaper he saw prospectus of two companies offering shares. Company A is a well established company and has a steady record of declaring 35% dividend for past many years. Company B is also a sound company. Dividends declared by it average 25% for the past many years. Mr. Zahid applied for share of company A having face value of Rs 1,000,000. His application was accepted for full amount and share was allotted to him. Required: (1). compute opportunity cost of Mr. Zahid. (2). Suppose the application of Mr. Zahid was not accepted and no share was allotted to him. He deposited the money in "fixed deposit account" with UBL at 15% rate of profit. Compute the amount of opportunity lost.
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