Picard Orchards Requires a R100,000 Annual Loan in Order to Pay

question 12

Multiple Choice

Picard Orchards requires a R100,000 annual loan in order to pay laborers to tend and harvest its fruit crop.Picard borrows on a discount interest basis at a simple annual rate of 11 percent.If Picard must actually receive R100,000 net proceeds to finance its crop, then what must be the face value of the note?

• A) R111,000
• B) R100,000
• C) R112,360
• D) R89,000
• E) R108,840

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Definitions:

Marginal Revenue

The supplementary income generated by the sale of an extra unit of a product or service.

Market Entry

The process by which a company enters a new market, confronting challenges such as competition, legal requirements, and customer acquisition.

Economic Profit

The difference between the total revenue generated by a business and the total opportunity costs of all resources used in the production process.

Competitive Price-searcher

A market structure where firms have some degree of market power, allowing them to set prices above marginal cost to seek profits, while still facing competition.