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Problem

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question

Suppose that a businessman is contemplating the purchase ofa 35,000machine,andthatheestimatesthatthemachinewillprovideareturn(netofoperatingcosts)of35,000 machine, and that he estimates that the machinewill provide a return (net of operating costs) of 10,000 per year for 4 years.Assume that the going rate of inter-estis a) 8 percent,b) 2 percent. Shouldhe buy it?
Plain-text mathematical notation (without MathML)
Suppose that a businessman is contemplating the purchase ofa 35,000machine,andthatheestimatesthatthemachinewillprovideareturn(netofoperatingcosts)of10,000 per year for 4 years.Assume that the going rate of inter-estis a) 8 percent,b) 2 percent. Shouldhe buy it?
Original LaTeX notation
Suppose that a businessman is contemplating the purchase ofa $35,000 machine, and that he estimates that the machinewill provide a return (net of operating costs) of $10,000 per year for 4 years.Assume that the going rate of inter-estis a) 8 percent,b) 2 percent. Shouldhe buy it?

category

economics

options

  1. Don't buy at both 2 percent and 8 percent interest
  2. Buy at 8 percent interest, don't buy at 2 percent interest
  3. Buy at both 2 percent and 8 percent interest
  4. Don't buy at 2 percent interest, negotiate a lower price before deciding at 8 percent interest
  5. Buy at 8 percent interest if the return period is less than 3 years
  6. Don't buy at 2 percent interest, buy at 8 percent interest if additional investment opportunities arise
  7. Buy at both rates only if the machine's return increases to $15,000 per year
  8. Buy at 2 percent interest, don't buy at 8 percent interest
  9. Buy at 2 percent interest, reconsider at 8 percent interest if the machine's lifespan increases
  10. Buy only if interest rates are negotiable

src

stemez-Economics

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