In the Consumer's NPV Decision, the Correct Value for the Interest

question 52

Multiple Choice

In the consumer's NPV decision, the correct value for the interest rate R is:

• A) the interest rate that could be earned in a savings account when the consumer must borrow to finance the purchase.
• B) the interest rate that would have to be paid on a loan when the consumer could pay for the purchase with funds in a savings account.
• C) the interest rate charged for the loan when the consumer must borrow to finance the purchase.
• D) the prime rate, irrespective of whether when the consumer must borrow to finance the purchase.
• E) the prime rate plus the rate of inflation as measured by the CPI, irrespective of whether when the consumer must borrow to finance the purchase.

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