What Is the Most an Investor Would Be Willing to Pay

question 10

Multiple Choice

What is the most an investor would be willing to pay for a stock that will pay $210 next year and nothing before or after?

• A)$200 regardless of the interest rate.
• B)$200 if the interest rate is 5 percent per year.
• C)$190.91 if the interest rate is 10 percent per year.
• D)B and C.
• E)None of the above.

---

Definitions:

Inventory

The quantity of goods or materials that a business has on hand at any given time.

Inventoriable Costs

Costs that are considered as assets on the balance sheet until the related goods are sold, at which point these costs are transferred to the cost of goods sold on the income statement.

Cost of Goods Purchased

The total expenses incurred to acquire inventory that is intended for resale.

Beginning Inventory

The value of a company's inventory at the start of an accounting period, serving as a basis for calculating cost of goods sold.