You have recently learned that the company where you work is being sold for $500,000. The company's income statement indicates current profits of $15,000, which has yet to be paid out as dividends. If the company is a 'going concern' indefinitely and profits are assumed to grow at a rate of 3%, what is the assumed opportunity cost of funds?

You have recently learned that the company where you work is being sold for $500,000. The company's income statement indicates current profits of $15,000, which has yet to be paid out as dividends. If the company is a 'going concern' indefinitely and profits are assumed to grow at a rate of 3%, what is the assumed opportunity cost of funds?

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter9: The Basic Tools Of Finance

Section: Chapter Questions

Problem 3CQQ

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