Which of the Following Prices Is Most Likely to Be

question 89

Multiple Choice

Which of the following prices is most likely to be seen if a firm is using odd-even pricing?

• A) $9.00
• B) $2.03
• C) $6.60
• D) $99.95
• E) $100.00

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Definitions:

Component Cost Of Equity

The rate of return that a company must offer investors to encourage investment in its equity, accounting for risk.

NPV

Net Present Value, a method used in capital budgeting to evaluate the profitability of an investment or project by discounting future cash flows to their present value.

Cost Of Capital

The rate of return a company must earn on its investment to maintain its market value and attract funds. It represents the cost of a company to secure funds, whether through debt or equity.

Capital Component

One of three sources of capital: debt, preferred stock, or equity.