To Determine an Individual Profit- Maximizing Firm's Maximum Purchase Price

question 49

Multiple Choice

To determine an individual profit- maximizing firm's maximum purchase price for a unit of capital it is necessary to

• A) compute the rental price of the unit of capital and the interest rate.
• B) compute the future value of the stream of benefits produced by the unit of capital.
• C) know how the interest rate is related to the cost of capital.
• D) compute the present value of the stream of benefits produced by the unit of capital.
• E) know what competing firms are prepared to pay.

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