The firm in the table below produces denim jeans and each unit of capital represents one sewing machine.The MRP for each of machines 10 through 14 is provided.Each sewing machine delivers a stream of MRPs beginning one year from now,for a total of 2 years.Assume that after 2 years each sewing machine is worth nothing.
TABLE 15-2
-Refer to Table 15-2.If the interest rate is 4% and the purchase price of a sewing machine is $2000,what is the optimal capital stock (number of sewing machines) for this firm?
Definitions:
Intrinsic Motivation
The drive to engage in an activity for its own sake and personal rewards, rather than for external rewards.
Basic Human Needs
Fundamental requirements necessary for individuals to live a healthy and well-adapted life, such as food, water, shelter, safety, and belonging.
Competence
The ability or skillset required to efficiently perform or complete a specific task or job.
Self-determination
The process by which an individual controls their own life, making choices and decisions based on their own preferences and interests rather than being influenced by external forces.
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