Question
Pollution Busters Inc. is considering a purchase of 10 additional carbon sequesters for $102,000 apiece. The sequesters last for only 1 year before becoming saturated.
Pollution Busters Inc. is considering a purchase of 10 additional carbon sequesters for $102,000 apiece. The sequesters last for only 1 year before becoming saturated. Then the carbon is sold to the government.
b-1.Suppose instead that the sequestered carbon has to be sold on the London Carbon Exchange. Carbon prices have been extremely volatile, but Pollution Busters' CFO learns that average rates of return from investments on that exchange have been about 21%. She thinks this is a reasonable forecast for the future. What is the opportunity cost of capital in this case?
Suppose instead that the sequestered carbon has to be sold on the London Carbon Exchange. Carbon prices have been extremely volatile, but Pollution Busters' CFO learns that average rates of return from investments on that exchange have been about 21%. She thinks this is a reasonable forecast for the future. What is the opportunity cost of capital in this case?
Opportunity cost of capital _________________%
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