Greg's Tasty Ice Cream is considering building a new ice cream factory that costs $8.3 million. The company accountants believe that, not accounting for interest costs, building the factory will increase profits by $5 million the first year, $4 million the second year and have no value thereafter. Greg's Tasty Ice Cream should build the factory if the interest rate is
a. 3% but not if it is 4%.
b. 4% but not if it is 5%.
c. 5% but not if it is 6%.
d. 6% but not if it is 7%.
c
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What will be an ideal response?
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What will be an ideal response?