The steeper an OC curve, the better it discriminates between good and bad lots

As part of its expansion project, A.J. Industries Equipment Division has expanded its office space

by 200 square feet. The company's administrative overhead is allocated based on the square footage of each business segment. Although the total administrative overhead for the company will remain the same, the Equipment Division will be charged more for administrative overhead. For the Equipment Division expansion project, the administrative overhead is an example of a(n) A) sunk cost. B) opportunity cost. C) incremental opportunity cash flow. D) incremental cash flow.

In 2000 Jenson Inc issued bonds with an 8 percent coupon rate and a $1,000 face value. The bonds

mature on March 1, 2025. If an investor purchased one of these bonds on March 1, 2012, determine the yield to maturity if the investor paid $1,100 for the bond. A) The yield to maturity must be greater than 8% because the price paid for the bond exceeds the face value. B) 7% C) The yield to maturity is $900 ($1,000 interest less $100 capital loss). D) 5.4%