Question an internet service provider isp is contemplating, Ask an Expert

Economics

Question: An Internet service provider (ISP) is contemplating an investment of $50,000 in new computer servers and related hardware. The ISP projects an annual rate of return on this investment of 6 percent.

a. The current market interest rate is 5 percent per year. Will the ISP undertake the investment?

b. Suddenly, there is an economic downturn. Although the market interest rate does not change, the ISP anticipates that the projected rate of return on the investment will be only 4 percent per year. Will the ISP now undertake the investment?

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Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M93126411

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