Use the Table for the Question(s)below

question 49

Essay

Use the table for the question(s)below.
-Assume that the risk-free interest rate is 10%.Rank each of the four projects from most desirable to least desirable based upon NPV.Which project would you invest in first? Are there any projects that you wouldn't invest in?

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Definitions:

Long-Run Aggregate Supply

The Long-Run Aggregate Supply represents the total production of goods and services in an economy at full employment, unaffected by short-term fluctuations.

Recessionary Gap

Occurs when the actual output of an economy is less than the potential output, indicating underutilized resources.

Actual Output

The actual total value of goods and services produced by an economy over a specific period.

Potential Output

Potential output refers to the maximum amount of goods and services an economy can produce when it uses its resources fully and efficiently, without prompting inflation.