Assume That a Firm Is Considering Building a Factory That

question 81

Multiple Choice

Assume that a firm is considering building a factory that will cost $5 million. It believes that it can get a profit from this factory of $600,000 per year for many years. The interest rate at which the firm can borrow money is 15 percent. After evaluating whether it should build the factory, the firm decides that it should:

• A) not build because the rate of return on the factory is only 6 percent.
• B) not build because the rate of return on the factory is only 12 percent.
• C) build because the rate of return on the factory is 30 percent.
• D) build because the rate of return on the factory is 35 percent.

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Definitions:

Gastrovascular Cavity

A gastrovascular cavity is a single internal cavity in certain simple animals that acts both in digestion and the distribution of nutrients.

Pedal Disk

The base of a cnidarian, such as a sea anemone or coral, that attaches to a substrate.

Groups of Muscles

Collections of muscle tissue that work together to perform a specific function in the body.

Arthropods

Arthropods are a large phylum of invertebrate animals characterized by their exoskeleton, segmented body, and jointed appendages, including insects, arachnids, crustaceans, and myriapods.