Gunnar Gjkason invests 8 Mkr (8 million ISK) in a company he is founding. Gunnar can get
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Question:
Gunnar Gjkason invests 8 Mkr (8 million ISK) in a company he is founding.
Gunnar can get 8.6% interest on deposits, but he has to pay 12.5% interest if he takes out a loan.
Now Gunnar is in a situation where he owes little but has a lot of deposits. In order to put 8 Mkr into the company, he withdraws 8 Mkr and reduces the deposits.
In the first year, the company's profit is ISK 1.5 million.
How much is the profit above the opportunity cost after one year of starting the business?
Have the answer in ISK (thousands of ISK),(e.g. if the answer is ISK 800, write 800 and not 800000)
Related Book For
Foundations of Financial Management
ISBN: 978-1259024979
10th Canadian edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta
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