You manage a new product development team for an electronics manufacturer, and your firm's policy is that all new projects must pay for themselves in the first five years
Your team has projected that the first year of the project requires an initial investment of $2 million with no revenue, the second year loss is $500,000, the net revenue for year 3 is zero, and you earn $1.8 million in both year 4 and year 5. If the opportunity cost of capital for your firm is 8%, should you go ahead with this project? A) No, the expected NPV is negative
B) Yes, the expected NPV is roughly $290,000
C) Yes, the expected NPV is $1.1 million
D) We do not have enough information to answer this question.
B
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In the figure above, the shift from DLF1 to DLF2 could result from
A) an increase in a government budget surplus. B) the economy entering a recession. C) the economy entering a strong expansion. D) an increase in the nominal interest rate. E) a decrease in the real interest rate.
A price floor set above the equilibrium price
A) creates a surplus. B) creates a shortage. C) creates excess demand. D) balances supply and demand. E) has no effect.
Union membership as a percentage of the labor force has been falling since the mid ______.
Fill in the blank(s) with the appropriate word(s).
Starting from long-run equilibrium, an increase in autonomous investment results in ________ output in the short run and ________ output in the long run.
A. lower; potential B. higher; higher C. lower; higher D. higher; potential