Assume There Are No Investment Projects That Will Produce an Expected

question 15

Multiple Choice

Assume there are no investment projects that will produce an expected rate of return of 8 percent or more.There are, however, $2 billion worth of investment projects with an expected rate of return at 7 percent, and an additional $2 billion for every drop of the interest rate by 1 percent.If the real interest rate is 3 percent in this economy, the cumulative amount of investment at the 3 percent or higher rate of return is

• A)$10 billion.
• B)$8 billion.
• C)$6 billion.
• D)$4 billion.

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