Suppose a Forestry Firm Increases Its Investment in New Technology

question 87

Multiple Choice

Suppose a forestry firm increases its investment in new technology for its sawmills.The firm employs both skilled and unskilled workers.After this new investment the wage gap between skilled and unskilled workers:

• A)is likely to be unaltered
• B)is likely to fall
• C)will rise only if marginal productivity of unskilled workers is not altered
• D)is likely to rise

---

Definitions:

Salvage Value

The estimated residual value of an asset at the end of its useful life, which can be recovered through disposal or sale.

Pretax Return

Pretax Return refers to the earnings of a company before the deduction of taxes, often used to analyze profitability from core operations.

Net Present Value

A method used in capital budgeting to assess the profitability of an investment, calculating the difference between the present value of cash inflows and outflows.

Additional Working Capital

Refers to the extra funds a business requires for its day-to-day operations, beyond its current operational needs.