Economics (MindTap Course List)
13th Edition
ISBN: 9781337617383
Author: Roger A. Arnold
Publisher: Cengage Learning
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Question
Chapter 29.1, Problem 4ST
To determine
Identify the present value of capital good.
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If you're authorized with some invested
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Why in the long run the rate of return on investments reflects the riskiness of those investments?
Assume that a firm is considering building a
factory that will cost $5 million. It believes that it
can get a profit from this factory of $600,000 per
year for many years. The interest rate at which
the firm can borrow money is 15 percent. After
evaluating whether it should build the factory,
the firm decides that it should
Select one:
a. build
b. not build
Chapter 29 Solutions
Economics (MindTap Course List)
Ch. 29.1 - Prob. 1STCh. 29.1 - Prob. 2STCh. 29.1 - Prob. 3STCh. 29.1 - Prob. 4STCh. 29.2 - Prob. 1STCh. 29.2 - Prob. 2STCh. 29.2 - Prob. 3STCh. 29.4 - Prob. 1STCh. 29.4 - Prob. 2STCh. 29.4 - Prob. 3ST
Ch. 29.4 - Prob. 4STCh. 29 - Prob. 1QPCh. 29 - Prob. 2QPCh. 29 - Prob. 3QPCh. 29 - Prob. 4QPCh. 29 - Prob. 5QPCh. 29 - Prob. 6QPCh. 29 - Prob. 7QPCh. 29 - Prob. 8QPCh. 29 - Prob. 9QPCh. 29 - Prob. 10QPCh. 29 - Prob. 11QPCh. 29 - Prob. 12QPCh. 29 - Prob. 13QPCh. 29 - Prob. 14QPCh. 29 - Prob. 15QPCh. 29 - Prob. 16QPCh. 29 - Prob. 17QPCh. 29 - Prob. 1WNGCh. 29 - Prob. 2WNGCh. 29 - Prob. 3WNG
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- What happens with the product that is out of stock? Explain in economic terms.arrow_forwardIf you have an idea of a product, a process or a service that you think will be in demand, particularly in business and economy as a whole, but you do not have enough capital to start it up, who would you look for?arrow_forwardA company has announced a profit, but why is the price of stock still falling? Is the market inefficient? Explain.arrow_forward
- Why would lenders want to see that a business already has some level of capitalization before giving it access to more capital by means of a loan?arrow_forwardSuppose sale of a firm is $22,000 and change in stock is $ 38,000 what would be the value of output?arrow_forwardDistinguish between saving and investment.arrow_forward
- Suppose that the initial dividend on a stock is £1. The interest rate is 3 percent and the growth rate of dividends is constant at 2 percent. What is the price of the stock?arrow_forwardHow is the acquisition of fixed assets an important activity for a business organization?arrow_forwardA firm's current profits are $900,000. These profits are expected to grow indefinitely at a constant annual rate of 2 percent. If the firm's opportunity cost of funds is 4 percent, determine the value of the firm:Instructions: Enter your responses rounded to one decimal place.a. The instant before it pays out current profits as dividends. b. The instant after it pays out current profits as dividends.arrow_forward
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