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- Define and explain the internal rate of return on a new investment?The sales are $2300 and change in stock is $3000 Find the value of output?Distinguish between nominal and real interest rates. Which is more relevant in making investment and R&D decisions? If the nominal interest rate is 12 percent and the inflation rate is 8 percent, what is the real rate of interest?
- investment spending in eonomic terms, includes spending toward physical capital, machinery, new factories and new housing? true or falseMany companies hold significant amounts of excess cash, that is, cash above the amount required for day-to-day operations. Does including excess cash as part of invested capital distort the ROIC upward or downward? Why?Dissaving occurs where: O saving exceeds consumption. saving exceeds income. income exceeds consumption. consumption exceeds income.
- What are the basic determinants of investment? Explain the relationship between the real interest rate and the level of investment. Why is investment spending unstable? How is it possible for investment spending to increase even in a period in which the real interest rate rises?1. If the MRPK is less than the cost of capital, a firm should increase its investment in physical capital. decrease its investment in physical capital. exit the industry. keep its investment in physical capital the same.The importance of income in determining savings has persisted since the time of Keynes. Why have other theories failed to displace income as the most critical variable in saving theory?
