Consider an Asset Costing $55 and Returning, by Contract, $11

question 46

Multiple Choice

Consider an asset costing $55 and returning, by contract, $11 per year. If the interest rate prevailing throughout the economy were 10%, you would expect to see

• A) the interest rate returned by the asset to climb to 30%.
• B) the price of the asset to climb to $100.
• C) the price of the asset to climb to $110.
• D) the price of the asset to fall to $45.
• E) the price of the asset to fall to $27.50.

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Definitions:

Profit Lines

In business, the delineation of various sources of income, identifying different products, services, or segments that contribute to the overall profitability of a company.

Shadow Price

In economics and optimization, it refers to the monetary value assigned to an otherwise intangible or non-marketable commodity based on its scarcity or the cost of its limitation in a certain context.

Optimal Solution

The best achievable outcome or decision among a set of alternatives that maximizes or minimizes the desired objective.

Scarce Resources

Resources that are limited in availability and cannot meet all demands of production or consumption at the same time.