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:

Response Time

The duration between the onset of a stimulus and the initiation of a reaction or response by an individual.

Graduation

The act of completing a course of study at a school or university, marked by the receipt of a diploma or degree.

Criminal Profiling

The process of predicting a criminal's characteristics based on the nature of the crime or other available evidence.

Applied Personality Testing

The use of psychological tests and assessments to evaluate individual differences in personality traits and characteristics, often for employment or therapeutic purposes.