Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Endangered Economies How The Neglect Of Nature Threatens Our Prosperity

Authors: Geoffrey Heal

1st Edition

0231180845, 9780231180849

More Books

Students also viewed these Accounting questions

Question

What is the general form of a ???? statistic?

Answered: 1 week ago