Suppose You Have Purchased a Non-Refundable Plane Ticket And, at the Last

question 114

Multiple Choice

Suppose you have purchased a non-refundable plane ticket and, at the last moment, you cannot take the trip.You can, however, sell the ticket.If you paid $700 for the ticket, the cost of sending the ticket to someone through overnight mail is $20, and you spend $10 on a courier to get the ticket to the post office for overnight delivery, what is the minimum you should accept for the ticket?

• A)$700 because that is what the ticket cost.
• B)$720 because that is the cost of the ticket and of getting it to the buyer.
• C)$730 because that is the total cost of the ticket and getting it to the buyer.
• D)More than $730, so that you can make a profit.
• E)$30 because the $700 is a sunk cost.

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Definitions:

Capital Lease

A lease classified as a financial transaction where the lessee gains substantial control over an asset, treated like an asset purchase.

Bond Indenture

A legal document specifying the terms and conditions under which a bond is issued, including the interest rate, maturity date, and other covenants.

Stated Interest Rate

The annual interest rate declared on a financial instrument, such as a loan or bond, not taking into account compounding or fees.

Market Interest Rate

The prevailing rate of interest available in the market, influencing the rates charged on loans and paid on deposits.