A computer you are considering for your business would add $4,000 per year to your profit. It would cost $400 a year to buy a complete maintenance contract so that you would never have repair and upkeep expense. The obsolescence depreciation is 25% a year. The going market interest rate is 5%. Assume all costs and revenue occur at the end of the year. What is the maximum you should be willing to pay for the machine?
What will be an ideal response?
Since the present value of the income stream is $14,183.80 and the machine is completely obsolete after four years, you would pay up to $14,183.80 minus the present value of the maintenance cost which is $1,417. Therefore you would pay $12,766.80.
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The United States produces ____ of what it consumes, and consumes ____ of what it produces.
A. little; little B. little; most C. most; little D. most; most
Past expenses are irrelevant to supply decisions, because
A) expenses incurred in the past never affect the opportunities available in the present. B) it is essential to avoid bankruptcy. C) no one remembers the past. D) supply decisions depend on opportunities that will have to be forgone, not opportunities already forgone.
The Constitution:
a. empowers each state to negotiate its own treaties with foreign governments. b. empowers the Congress to pay off all public debts, including those incurred by the states. c. allows for states to set tariffs on goods imported from another state. d. allows only the Congress to set tariffs on goods moving from one state to another.
Economists like Hernando de Soto feel that a ___________ is the key to economic development.
A. strong national defense B. strong currency C. strong titling system D. stable currency