HydroGrow Is Considering Building a New Greenhouse in Which to Grow

question 39

Multiple Choice

HydroGrow is considering building a new greenhouse in which to grow tomatoes.The board meets and decides that this is the right thing to do.Before they can put their plans into action,the interest rate increases.The present value of the returns from this investment project

• A)is now lower than it was before,and so Hydro Grow is less likely to build the building.
• B)is now lower than it was before,and so HydroGrow is more likely to build the building.
• C)is now higher than it was before,and so HydroGrow is less likely to build the building.
• D)is now higher than it was before,and so HydroGrow is more likely to build the building.

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Definitions:

Marginal Tax Rate

The rate at which the last dollar of income is taxed, indicating the percentage of tax applied to your income for each tax bracket in which you qualify.

Taxable Income

Taxable income is the portion of an individual's or company's income used as the basis to calculate the taxes owed to the government.

Average Tax Rate

The ratio of the total amount of taxes paid to the total taxable income, indicating the portion of income that is paid in taxes.

Marginal Tax Rate

The tax rate that applies to the last dollar of the taxpayer's income, indicating the percentage of tax paid on any additional income earned.