1. Which one of the following sets of conditions represents the more suitable investment?

a. total revenues cover fixed and variable costs

b. an investment breaks even in an accounting sense

c. an investment breaks evven in an economic sense

d. total revenues exceeds the cost of goods sold

2. A new financial services company just opened in your town. To attract new customers, it is offering an 80-100 loan special. The company will lend $80 today in exchange for a payment of $100 three years from today, what is the EAR on this loan?

A) 7.72%

B) 6.25%

C) 10%

D) 5.73%

E) 11.8%