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Business, 21.10.2020 17:01 malik70831

Pollution Busters Inc. is considering a purchase of 10 additional carbon sequesters for $120,000 apiece. The sequesters last for only 1 year before becoming saturated. Then the carbon is sold to the government. How would you determine the opportunity cost of capital for this investment? Suppose the government guarantees the price of carbon. At this price, the payoff after 1 year is $140,400 for sure.

a. Opportunity cost of capital for this investment is determined by U. S Treasuries with 1 year to maturity.
b. Opportunity cost of capital for this investment is determined by U. S Treasuries with 2 year to maturity

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