When buying a piece of equipment, it is always best for the firm to pay cash instead of borrowing the funds since this renders the equipment less costly
Indicate whether the statement is true or false
False. It depends. The opportunity cost of the capital when paying cash is the interest the firm receives on its cash reserves. This is an implicit cost. The opportunity cost of the capital when the funds are borrowed is the interest the firm must pay to the lender. This is an explicit cost. If the rate the firm receives on its cash reserves exceeds the rate at which it borrows, the firm is better off borrowing the funds to buy the equipment.
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Which of the following causes an economy to move rightward along the aggregate production function?
A) A decrease in the capital stock B) An improvement in technology C) An increase in the productivity of workers D) An increase in the price level
Under the Bretton Woods system, participating countries
A) pegged their currencies to the U.S. dollar. B) maintained a fixed exchange rate with gold. C) allowed their currencies to float freely. D) pegged their values to the British pound.
If there are only two goods in the economy, one whose price rises by 3 percent and one by 5 percent, it is possible that inflation is:
A. 4 percent. B. 5 percent. C. 3 percent. D. 7 percent.
Is rational self-interest the same thing as selfishness? Explain
Please provide the best answer for the statement.