In evaluating public projects, a higher interest rate (r) will favor those projects which
a. have costs and benefits occurring in the more distant future.
b. have costs and benefits occurring in the more immediate future.
c. have benefits occurring in the more immediate future and costs occurring in the more distant future.
d. have benefits occurring in the more distant future and costs occurring in the more immediate future.
c
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Which of the following would most likely cause a rightward shift in a demand curve?
a. a discovery about a product being made in sweat shops b. a recall of an automobile c. a celebrity promoting a sports drink d. an outbreak of E. coli in chicken
According to the text, The American Recovery and Reinvestment Act of 2009:
A. remains hotly debated whether it was successful or not. B. is known as the most effective legislation ever passed in U.S. history. C. was unsuccessful. D. was successful.
What is likely to be the best approach to a recession that is expected to turn into an expansion in a short time?
(A) Do nothing and let the economy fix itself. (B) Use monetary policy to lower interest rates. (C) Use fiscal policy to lower interest rates. (D) Use monetary policy to raise interest rates.
Smyth Industries operated as a monopolist for the past several years, earning annual profits amounting to $50 million, which it could have maintained if Jones Incorporated did not enter the market. The result of this increased competition is lower prices and lower profits; Smyth Industries now earns $10 million annually. The managers of Smyth Industries are trying to devise a plan to drive Jones Incorporated out of the market so Smyth can regain its monopoly position (and profit). One of Smyth's managers suggests pricing its product 50 percent below marginal cost for exactly one year. The estimated impact of such a move is a loss of $1 billion. Ignoring antitrust concerns, compute the present value of Smyth Industries' profits if it remains a duopolist in this market when the interest
rate is 5 percent. A. $210 million B. $1.05 billion C. $200 million D. $100 million