Suppose a firm is considering the purchase of a machine which when used will increase its total revenues by $10,000 for the year. The machine costs $8,000 and has a useful life of one year. The interest rate is 20 percent. This investment should:
A. Be undertaken because the rate of return is 2 percent greater than the interest rate
B. Be undertaken because the rate of return is 5 percent greater than the interest rate
C. Be undertaken because the rate of return is 7 percent greater than the interest rate
D. Not be undertaken because the rate of return is 7 percent less than the interest rate
B. Be undertaken because the rate of return is 5 percent greater than the interest rate
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