Suppose a handbill publisher can buy a new duplicating machine for $ 500  and the duplicator has a 1-year life. The machine is expected to contribute $ 550 to the year's net revenue.  Instructions: enter your anwer as a whole number.  What is the expected rate of return? (in percentage) If the real interest rate at which funds can be borrowed to purchase the machine is 8 percent, will the publisher choose to invest in the machine?  Will it invest in the machine if the real interest rate is 9 percent? if it is 11 percent?

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Chapter13: Capital, Interest, Entrepreneurship, And Corporate Finance
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Suppose a handbill publisher can buy a new duplicating machine for $ 500  and the duplicator has a 1-year life. The machine is expected to contribute $ 550 to the year's net revenue. 

Instructions: enter your anwer as a whole number. 

What is the expected rate of return? (in percentage)

If the real interest rate at which funds can be borrowed to purchase the machine is 8 percent, will the publisher choose to invest in the machine? 

Will it invest in the machine if the real interest rate is 9 percent? if it is 11 percent? 

 

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