Why Does Increased Productivity of Capital Shift the Demand for Loanable

question 165

Multiple Choice

Why does increased productivity of capital shift the demand for loanable funds?

• A) More productive capital generates more profits,reducing the need for firms to borrow money.
• B) More productive capital means greater consumption of raw materials,which must be paid for with borrowed money.
• C) More productive capital boosts competition,which leads to greater demand for loans to keep up with rival firms.
• D) More productive capital reduces workers' incentive to work,which leads to greater demand for loans in order to pay workers more.
• E) More productive capital earns more money,which justifies a higher interest rate on money borrowed to buy the capital.

Comprehend the concept and application of the modified internal rate of return (MIRR).

Calculate the approximate MIRR of a project and understand its implications.

Recognize the technical problems associated with the IRR method.

Grasp the significance of a firm's cost of capital in evaluating investment projects.

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Definitions:

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refer to different strategies or methods to solve a problem or achieve a goal, aside from the initial or obvious choice.

Best Solution

The most effective or suitable way of solving a problem or dealing with a situation.

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The practice of obtaining information or input into a task or project by enlisting the services of a large number of people, either paid or unpaid, typically via the internet.

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The act of establishing formal agreements between two or more parties, typically involving the exchange of goods, services, or commitments.