When a Firm Makes Plans for Investments in Physical Capital

question 32

Multiple Choice

When a firm makes plans for investments in physical capital, it compares the _______ on these investments with _______.

• A) projected rates of return; the cost of financial capital to the firm
• B) present inputs of physical capital; future hurdle rates
• C) present inputs of physical capita; future marginal revenue product
• D) projected rates of return; the competitive pressures for labor

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Definitions:

Call Provision

A feature of a bond that allows the issuer to repay the bond before its maturity date.

Debenture Agreement

A legal document that specifies the terms of a bond issue, promising repayment of borrowed money plus interest at fixed intervals.

Registration Form

A document required to officially register or enroll someone or something in a certain activity, event, or for the usage of a service.

Indenture

A formal legal agreement between a bond issuer and the bondholders, detailing the terms of the bond.