A firm invests in a new machine that costs $2,000 a year but which is expected to produce an increase in total revenue of $2,200 a year. The current real rate of interest is 8 percent. The firm should:
A. Undertake the investment because the expected rate of return of 12 percent is greater than
the real rate of interest
B. Undertake the investment because the expected rate of return of 10 percent is greater than
the real rate of interest
C. Undertake the investment because the expected rate of return of 9 percent is greater than
the real rate of interest
D. Not undertake the investment because the expected rate of return of 7 percent is less than
the real rate of interest
B. Undertake the investment because the expected rate of return of 10 percent is greater than
the real rate of interest
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DeShawn's Detailing is a service that details cars at the customers' homes or places of work. DeShawn's cost for a basic detailing package is $40, and he charges $75 for this service. For a total price of $90, DeShawn will also detail the car's engine, a
service that adds an additional $20 to the total cost of the package. What is the marginal cost of adding the engine detailing to the basic detailing package? A) $20 B) $30 C) $60 D) $60 plus the value of his time
Which of the following actions should be discussed with an attorney before undertaking as the action could be considered legal?
A) a tying sale with a customer B) an agreement with a competitor firm to set prices C) an agreement with a competitor firm to not sell to a particular customer D) an agreement with a competitor firm to adjust output levels