Notes  • 303
Appendix B
1. The idea behind this process is to match the timing of the costs of 
equipment with revenues from the items produced with that equip-
ment. This is a key principle of accountancy called matching.
2. The problem is that troughs, by definition, follow peaks. Usually, just 
like the timing of large acquisitions, companies decide to spend huge 
amounts to build new production capacity at just about the same time 
that economic conditions peak, and the factories come online just as 
the economy is starting to sputter and fail.
Appendix C
1. A penny saved is a penny earned. We can think of the option being 
cheaper by the amount of the dividend, so we will place the amount 
that we save on the call option in savings.
2. This is calculated using the following equation:
Interest = strike × r × percent of 1 year
In the case of the $18 strike, interest = 18 × 0.14% × (373 days/365 days 
per year) = $0.03.