Suppose a firm is considering the purchase of a machine which when used will increase its total revenues by $10,000 for the year. The machine costs $8,000 and has a useful life of one year. The interest rate is 20 percent. This investment should:
A. Be undertaken because the rate of return is 2 percent greater than the interest rate
B. Be undertaken because the rate of return is 5 percent greater than the interest rate
C. Be undertaken because the rate of return is 7 percent greater than the interest rate
D. Not be undertaken because the rate of return is 7 percent less than the interest rate
B. Be undertaken because the rate of return is 5 percent greater than the interest rate
You might also like to view...
The functions of money are
A) medium of exchange, unit of account, and store of value. B) medium of exchange, the ability to buy goods and services, and the ability to pay off debts. C) medium of exchange, the ability to buy goods and services, and checking accounts. D) credit cards, checking accounts, currency, and coins. E) store of value, use as a barter mechanism, and unit of account.
Those closest to fomenting a real revolution during the early years of the Great Depression were
(a) bankers. (b) farmers. (c) industrial workers. (d) the middle class.