9780321818171_berk_ch03

You notice that on ebay tickets to the celine dion

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Unformatted text preview: is a second choice: two tickets to Justin Bieber’s sold-out show (face value $50 each). You notice that on eBay, tickets to the Celine Dion show are being bought and sold for $60 apiece and tickets to Justin Bieber’s show are being bought and sold at $100 each. What should you do? Solution ◗ Plan Market prices, not your personal preferences (nor the face value of the tickets), are relevant here: 4 Celine Dion tickets at $60 apiece 2 Justin Bieber tickets at $100 apiece 03_ch03_berk.indd 03_ch03_berk.indd 70 12/15/11 8:08 PM Chapter 3 The Valuation Principle: The Foundation of Financial Decision Making 71 You need to compare the market value of each option and choose the one with the highest market value. ◗ Execute The Celine Dion tickets have a total value of $240 (4 $60) versus the $200 total value of the Justin Bieber tickets (2 $100). Instead of taking the tickets to Justin Bieber, you should accept the Celine Dion tickets, sell them on eBay, and use the proceeds as you wish. ◗ Evaluate Even though Celine Dion’s music brings back...
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This note was uploaded on 02/07/2014 for the course MIS 304 taught by Professor Mejias during the Spring '07 term at University of Arizona- Tucson.

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