Table 92 -Refer to Table 9

question 67

Multiple Choice

Table 9.2
$$\begin{array} { | l c | } \hline \text { Cost of machine } & \$ 300,000 \\\hline \text { Arnual autput from mechine } & \$ 35,000 \\\hline \text { Arnual interett rate on loans } & 9 \% \\\hline\end{array}$$
-Refer to Table 9.2. If a firm purchases the machine by taking out a one-year loan, what happens to the firm's rate of return on the investment if the interest rate increases to 10 percent?

• A) It increases to 1.5 percent
• B) It increases to 0.15 percent
• C) It decreases to 1.5 percent
• D) It decreases to 1.7 percent
• E) It decreases to 0.17 percent

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Definitions:

Innovative Product

A new or significantly improved good or service that offers unique benefits or solves problems in a novel way.

Brand-Name Recognition

The extent to which a consumer can accurately identify a brand based on visual or auditory cues.

Trade Secrets

Confidential business information that provides an enterprise a competitive edge, such as formulas, practices, designs, instruments, or patterns.

Inverted-U Theory

suggests that there is an optimal level of some variable, beyond which its effect starts to decline or become negative.