A Firm Invests in a New Machine That Costs $2,000

question 119

Multiple Choice

A firm invests in a new machine that costs $2,000 a year but which is expected to produce an increase in total revenue of $2,200 a year.The current real rate of interest is 8 percent.The firm should

• A)undertake the investment because the expected rate of return of 12 percent is greater than the real rate of interest.
• B)undertake the investment because the expected rate of return of 10 percent is greater than the real rate of interest.
• C)undertake the investment because the expected rate of return of 9 percent is greater than the real rate of interest.
• D)not undertake the investment, because the expected rate of return of 7 percent is less than the real rate of interest.

---

Definitions:

Peer Group Smoking

The influence that a group of peers may have on an individual's decision to start or continue smoking.

Occupational Ethics

A set of principles and standards that guide behavior and decision-making in a specific profession or workplace.

Honesty Ratings

Measures or evaluates the extent to which an individual or entity is perceived as truthful and sincere.

Respected Jobs

Respected jobs are professions or occupations that are highly regarded or esteemed by society due to their perceived importance, impact, or ethical standards.