Multiple Choice
The firm in the table below produces denim jeans and each unit of capital represents one sewing machine.The MRP for each of machines 10 through 14 is provided.Each sewing machine delivers a stream of MRPs beginning one year from now,for a total of 2 years.Assume that after 2 years each sewing machine is worth nothing.
TABLE 15-2
-Refer to Table 15-2.If the interest rate is 4% and the purchase price of a sewing machine is $2000,what is the optimal capital stock (number of sewing machines) for this firm?
A) 11
B) 12
C) 13
D) exactly 14
E) at least 14
Correct Answer:
Verified
Correct Answer:
Verified
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