Healthy Fish,Inc

question 12

Essay

Healthy Fish,Inc.is considering the purchase of a batch of experimental fish fry for $10,000.The fry will mature and be ready for the market in a year.A government agency guarantees the hardiness of the new breed-it will make a one-for-one same-size replacement if any fish should die of infections during the first year when reared according to clearly specified instructions.Healthy Fish expects to spend another $42,000 to raise the fish.Suppose that Healthy Fish can enter into a futures contract to sell the entire batch of fish for $60,000,the contract will cost $3,000.What is the opportunity cost of capital for this investment? Should Healthy Fish make the investment? If Healthy Fish cannot set up a futures contract,what is its opportunity cost of capital? Should it invest in this case? Assume that the current interest rate on AAA corporate bonds is 6.25%,and that the historical rate of return on the stock exchange is 10%.

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Definitions:

Outrageous

Describes actions or behaviors that are shocking, extreme, and exceed the bounds of decency in a societal context.

Law of Torts

A branch of civil law that deals with legal liabilities, obligations, and damages arising from wrongful acts not involving contracts.

Statutory Law

Law enacted by a legislative body, such as a Congress or Parliament, that specifies and mandates behaviors, procedures, and consequences within its jurisdiction.

Qualified Privilege

A legal defense in defamation cases allowing freedom of expression without liability, provided the statements are made without malice on occasions where the party has a legal, moral, or social duty to make them.