Assume That a Firm Is Considering Building a Factory That

question 81

Multiple Choice

Assume that a firm is considering building a factory that will cost $5 million. It believes that it can get a profit from this factory of $600,000 per year for many years. The interest rate at which the firm can borrow money is 15 percent. After evaluating whether it should build the factory, the firm decides that it should:

• A) not build because the rate of return on the factory is only 6 percent.
• B) not build because the rate of return on the factory is only 12 percent.
• C) build because the rate of return on the factory is 30 percent.
• D) build because the rate of return on the factory is 35 percent.

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Definitions:

Synovial Membrane

The lining of joint cavities that secretes synovial fluid, providing lubrication to reduce friction between cartilage surfaces in movable joints.

Articular Cartilage

A smooth, white tissue that covers the ends of bones where they come together to form joints, reducing friction.

Synovial Membrane

The lining of a synovial joint that secretes synovial fluid, allowing for smooth movement of the joint.

Symphysis Joints

A type of cartilaginous joint where bones are joined by fibrocartilage, allowing for slight movement.