Suppose Your Company Owns a Computer That Cost $10,000 and Depreciates

question 101

Essay

Suppose your company owns a computer that cost $10,000 and depreciates $500 per year. If the interest rate is 5 percent, what is the implicit rental price of the computer? When interest rates increase, are firms more or less likely to purchase equipment?

---

Definitions:

Tenured College Professor

A faculty member whose position is permanently secured, usually after a probationary period, protecting them from arbitrary dismissal.

Comparable Worth

The concept that jobs requiring comparable skills, effort, responsibility, and working conditions should be paid equally.

Minimum Wage

The lowest remuneration that employers can legally pay their workers, established by government law.

Hazardous Occupations

Jobs or professions that involve a high risk of physical injury or health hazards to the employees performing them.