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Essentials of Economics 7th Edition by Gregory Mankiw
Edition 7ISBN: 978-1285165950Essentials of Economics 7th Edition by Gregory Mankiw
Edition 7ISBN: 978-1285165950 Exercise 1
A company has an investment project that would cost $10 million today and yield a payoff of $15 million in 4 years.
a. Should the firm undertake the project if the interest rate is 11 percent? 10 percent? 9 percent? 8 percent?
b. Can you figure out the exact cutoff for the interest rate between profitability and nonprofitability?
a. Should the firm undertake the project if the interest rate is 11 percent? 10 percent? 9 percent? 8 percent?
b. Can you figure out the exact cutoff for the interest rate between profitability and nonprofitability?
Explanation
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(a)
The future value of an investment p...
Essentials of Economics 7th Edition by Gregory Mankiw
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