Builders Inc

question 28

Multiple Choice

Builders Inc. agrees to construct an office building for Commerce Center Corporation. The project proceeds according to plan, but before it is done, the buyer tells Builders to quit. In a suit for breach, Builders may recover

• A)nothing.
• B)the contract price.
• C)the costs needed to complete construction.
• D)profits plus the costs incurred up to the time of the breach.

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Definitions:

Preferred Stock

A class of ownership in a corporation with a higher claim on assets and earnings than common stock, usually with dividends that are paid out before those to common stockholders.

Common Stock

A type of security that signifies ownership in a corporation, entitling the holder to a share of the company's assets and profits.

Pre-Tax Cost of Debt

The interest rate a company pays on its borrowings before taking into account any tax deductions.

Zero-Coupon Bonds

Zero-coupon bonds are debt securities that are issued at a discount to their face value and don’t pay interest before maturity; instead, investors receive the face value at maturity.