n increase in interest rates will increase economic investment. 1) True 2) False b) The purchase of Amazon stock is a part of financial investment, but not of economic investment. 1) True 2) False
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- A.Imagine you own a company and invest in it from your retained profits and not borrowed funds, will this investment decision be affected by the transformation in the rate of interest?Explain. B.what is an investment function?what are the different types of invetment?(15 Marks)Suppose you purchase a new house for $200 000, making a down payment of 5% and takingout a mortgage on the balance. What is the return on your investment in your house if one yearlater the price of your house increased by 10%? (show your work).A) 100%B) 150%C) 200%D) 220%A firm will invest in capital if... the present value of the capital is greater than the market rate of interest. the internal rate of return is less than the market rate of interest. the internal rate of return is greater than the market rate of interest. the present value of the capital is less than the market rate of interest.
- Now suppose you invest in both a factory and the research for the production of Green jetpacks. Look at the factory and research as a total investment. Calculate the net present value (NPV) before tax on the investment based on the following information: The investment cost is paid in full in quarter 0, and the cost of the factory is 100000 while the cost of the research is also 100000. The factory has a lifetime of 20 quarters (5 years) and the value of the factory at the end of quarter 20 is 0 Only green jetpacks should be produced at the factory throughout its lifetime. There is no investment in research to streamline production or material consumption. Suppose the quarterly demand in the market is constant and given at P = 338 - 0.018 * Q, where P is price and Q is the number of jetpacks in demand. There are 5 competitors in the market (including you), and all sell the same number of jetpacks each quarter at the price of 248 each. You produce as much as you sell. The costs…Most businesses would probably not undertake investment projects for which the expected rate of profit were Multiple Choice greater than the going interest rate. one percent more than the going interest rate. equal to or less than the going interest rate. less than the going interest rate.Hua Xing runs a lawn care service. Buying an additional riding lawn mower will cost $3,000 but would allow her firm to earn $1,000 of additional revenue each year for the next four years. She expects marginal efficiency of capital to be at least 10%. Which statement is an accurate description of this investment opportunity? a) Hua Xing should make the investment because turning $3,000 into $4,000 provides a rate of return of 33%. b) Hua Xing should not make the investment because it has a negative net present value. c) Hua Xing should not make the investment because it provides only a 5.16% return on investment. Od) Hua Xing should make the investment because the internal rate of return exceeds 10%.
- Refer to Figure 8.8. The amount of planned investment if the interest rate rises from 4% to 8%.When you invest your money in the stock Market, the original investment is called the ................. .What is the formula for calculating Net Present Value (NPV)? a) NPV = Total Revenue - Total Costs b) NPV = Total Costs - Total Benefits c) NPV = Initial Investment - Total Revenue d) NPV = Total Benefits - Initial Investment
- Define Purchase of Investment.a) Expectation of return from investment has two things, one is 'Liquidity preference' and 'Abnormal Return'. Which one do you prefer? Explain why. b) As a rational investor in which process would you like to utilize for your investment decision?investment A promises to pay £500,000 profit at the end of the first year, £550,000 at the end of two years, £600,000 at the end of three years, and £625,000 at the end of four years. Investment B promises to pay £25,000 profit at the end of the first year, £100,000 at the end of two years, £600,000 at the end of the third year, and £1,000,000 at the end of four years. Assume that nine percent per year is an appropriate discount rate for each investment. Also, assume a zero-scrap value for each investment at the end of four years. Determine which investment promises to be the better of the two for the company
