be Question 2: Should a firm invest? (show all your work. Points will be deducted for no work) (20 points) A firm learns a firm has an investment opportunity that will earn future revenue 4 years from now by $160,000. The marginal cost of the physical capital today is $125,000. The firm makes this investment at an interest rate of 5%. Using this information answer the questions below 1. Should this frim make this investment? 2. What is the discounted percentage for this investment? 3. Other things being equal, could this investment be made a higher interest rate? Lower? Why, Show with numbers 4. Other things being equal, could this investment be made for longer term? Shorter term? Why?, Show with numbers
be Question 2: Should a firm invest? (show all your work. Points will be deducted for no work) (20 points) A firm learns a firm has an investment opportunity that will earn future revenue 4 years from now by $160,000. The marginal cost of the physical capital today is $125,000. The firm makes this investment at an interest rate of 5%. Using this information answer the questions below 1. Should this frim make this investment? 2. What is the discounted percentage for this investment? 3. Other things being equal, could this investment be made a higher interest rate? Lower? Why, Show with numbers 4. Other things being equal, could this investment be made for longer term? Shorter term? Why?, Show with numbers
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
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Transcribed Image Text:be
Question 2: Should a firm invest? (show all your work. Points will be deducted
for no work) (20 points)
A firm learns a firm has an investment opportunity that will earn future revenue
4 years from now by $160,000. The marginal cost of the physical capital today
is $125,000. The firm makes this investment at an interest rate of 5%. Using
this information answer the questions below
1. Should this frim make this investment?
2. What is the discounted percentage for this investment?
3. Other things being equal, could this investment be made a higher interest
rate? Lower? Why, Show with numbers
4. Other things being equal, could this investment be made for longer term?
Shorter term? Why?, Show with numbers
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