Assume That Costa Plc Buys a Machine in 2003 for $200,000

question 37

Multiple Choice

Assume that Costa Plc buys a machine in 2003 for $200,000 when the general price index is 150. At the end of 2006, the index has risen to 210 and the current cost of the machine is $300,000. What would be the unrealized holding gain in constant purchasing power terms?

• A) $100,000
• B) $220,000
• C) $120,000
• D) $ 80,000
• E) $ 20,000
• F) $280,000

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