Explain how many car companies will buy a new car assembly, Ask an Expert

Economics

Suppose that five car companies are considering borrowing $5,000 each to buy a new car assembly machine. If a company decides to buy the new machine, then they must borrow $5,000.

The annual real returns on these machines, also known as the value of marginal product of capital, are shown in the table below. The value of marginal product of capital is revenue net of operating costs, taxes, and opportunity costs, but it does not account for the interest payment. Assume that the car assembly machines can always be resold at their original price.

Company Value of Marginal Product of Capital (per Year)

A $550
B $450
C $350
D $250
E $150

If the annual real interest rate on the loans is 6%, explain how many car companies will buy a new car assembly machine? Interest payments are made once a year.

View complete question

Business Economics, Economics

Category:- Business Economics
Reference No.:- M9282021

Have any Question?Write your Review or question?

Related Questions in Business Economics

The table shows the results of a survey in

The table shows the results of a survey in which 400 adults from the? East, 400 adults from the? South, 400 adults from the? Midwest, and 400 adults from the West were asked if traffic congestion is a serious problem. Co ...

Please discuss the followingas demand increased for these

Please discuss the following: As demand increased for these mortgage backed securities, lenders reacted by relaxing their approval standards to increase production. No longer were "all" borrowers required to document the ...

Doing research for insurance rates it is found that those

Doing research for insurance rates, it is found that those aged 30 to 49 drive an average of 38.7 miles per day with a standard deviation of 6.7 miles. These distances are normally distributed. If a group of 60 drivers i ...

A study of cancer was conducted among 10000 men in the

A study of cancer was conducted among 10,000 men in the United States who were 40-75 years of age. Every two years questionnaires are sent to these individuals, and newly diagnosed cases of various cancers were reported. ...

University bookstores order books that instructors adopt

University bookstores order books that instructors adopt for the courses. The number of copies order matches the projected the demand. However, at the end of the semester the bookstore has too many copies on hand and mus ...

A mixture of three water samples will test positive for a

A mixture of three water samples will test positive for a contaminant if at least one of the samples contains it. If the contaminant is present in 7% of samples, find the probability that: 1. The mixture tests positive: ...

What is the usefulness of the total revenue test for price

What is the usefulness of the total revenue test for price elasticity of demand? What are the factors that affect price elasticity of demand and price elasticity of supply? What are some applications of each?

The appendix to chapter one will be very useful in

The appendix to chapter one will be very useful in answering this question, if you need a refresher or introduction to regression analysis. The following equation is the regression results of a study on infant mortality ...

Why does a government undertakes expansionary fiscal

Why does a government undertakes expansionary fiscal policy? What are the problems of undertaking expansionary fiscal policy? When is fiscal policy more appropriate than monetary policy?

The demand fornbspbedspreadsisnbsppnbspnbsp150-4qdthe

The demand for bedspreadsis P ? = 150-4 QD . The supply of bedspreads is P ? = 125+5 QS . What is the equilibrium price of a bedspread and what is the equilibrium quantity of bedspreads?? The equilibrium price is ?$()a ...

4,153,160 Questions Asked
13,132 Experts
2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Recent Questions

Ask Business Economics Expert