Your Subscription to Jogger's World Monthly Is About to Run

question 60

Multiple Choice

Your subscription to Jogger's World Monthly is about to run out and you have the choice of renewing it by sending in the $10 a year regular rate or of getting a lifetime subscription to the magazine by paying $100.Your opportunity cost is 7 percent.How many years would you have to live to make the lifetime subscription the better buy? Payments for the regular subscription are made at the beginning of each year.(Round up if necessary to obtain a whole number of years. )

• A) 15 years
• B) 10 years
• C) 18 years
• D) 7 years
• E) 8 years.

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Definitions:

Outstanding Shares

The total number of shares of stock that are owned by stockholders on any particular date.

Stockholders' Equity

The residual interest in the assets of a corporation after deducting liabilities, representing ownership interest.

Treasury Stock

Shares that were originally issued and fully paid for but have since been bought back by the issuing company, reducing the amount of outstanding stock.

Purchases

The acquisition of goods or services in exchange for monetary payment in the course of business operations.