In the summer of 2008, at Heathrow airport in London, Bestofthebest (BB), a private company, offered a lottery to win a Ferrari or

99,000

British pounds, equivalent at the time to about

$198,000.

Both the Ferrari and the money, in 100-pound notes, were on display. If the U.K. interest rate was

4 %

per year, and the dollar interest rate was

2 %

per year (EARs), how much did it cost the company in dollars each month to keep the cash on display? That is, what was the opportunity cost of keeping it on display rather than in a bankaccount? (Ignore taxes.)   Hint: Make sure to round all intermediate calculations to at least five decimal places.

The opportunity cost of keeping it on display rather than in a bank account is

pound£____?

Answer rating: 100% (QA)

Current exchnage rate between Pound and dollar 19800099000 pound 2 per ... View the full answer