Refer to the Data Provided in Table 11 -Refer to Table 11

question 59

Multiple Choice

Refer to the data provided in Table 11.1 below to answer the following questions.
Table 11.1 $$\begin{array} { l c c } { \text { Project } } & \begin{array} { c } \text { Total Investment } \\\text { (dollars) }\end{array} & \begin{array} { c } \text { Expected Rate of Return } \\\text { (percentage) }\end{array} \\\hline \text { New notebook computer for sales staff } & \$ 500,000 & 22 \\\text { Remodel for distribution center } & \$ 400,000 & 18 \\\text { On-site day care center } & \$ 200,000 & 10 \\\text { Employee fitness center } & \$ 100,000 & 8\end{array}$$
-Refer to Table 11.1. If the interest rate is 20%, Nashbar Bicycle should

• A) fund only the purchase of new notebook computers for its sales staff.
• B) fund all of the projects except for the purchase of new notebook computers for its sales staff.
• C) fund all of the projects.
• D) not fund any of the projects.

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Definitions:

Producer Surplus

The difference between what producers are willing to accept for a good or service versus what they actually receive, measuring their benefit.

Total Surplus

The sum of consumer surplus and producer surplus, representing the total benefit to society from the production and consumption of a good or service.

Tax

A financial charge or levy imposed by a government on individuals, corporations, or transactions to fund public expenditures.

Consumer Surplus

The gap between what consumers are prepared and able to spend on a product or service compared to what they end up paying in reality.