Scenario 18-3 Sam Has Two Jobs, One for the Winter and One

question 416

Multiple Choice

Scenario 18-3
Sam has two jobs, one for the winter and one for the summer. In the winter, he works as a lift attendant at a ski resort where he earns $13 per hour. During the summer, he drives a tour bus around the ski resort, earning $11 per hour.
-Refer to Scenario 18-3. During the summer months, what is Sam's opportunity cost of taking an hour off work to go hiking?

• A)$13
• B)between $11 and $12
• C)$11
• D)less than $11

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Definitions:

Coupon Rate

A bond's interest rate per year, represented as a percentage of its face value.

Maturity

The date on which the principal amount of a financial instrument, such as a bond or loan, becomes due and payable.

After-Tax Cost of Debt

The net cost to a company for borrowing funds after accounting for the tax benefit derived from interest expense deductions on its corporate income tax.

Coupon Rate

The interest rate that a bond issuer will pay to the bondholder on the face value of the bond.