When the Marginal Rate of Return Expected from a Purchase

question 41

Multiple Choice

When the marginal rate of return expected from a purchase of equipment is less than the market interest rate, then the firm should

• A)seek government assistance in decreasing the market interest rate
• B)inform stockholders that the company can expect increased earnings from the purchase
• C)either purchase or not purchase the equipment depending on the marginal resource cost of the equipment
• D)purchase the equipment
• E)not purchase the equipment

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