Assume a machine that has a useful life of only one year costs $2,000. Assume also that net of such operating costs as power, taxes, and so forth, the additional revenue from the output of this machine is expected to be $2,300. If the firm finds it can borrow funds at an interest rate of 10%, the firm should:
A. not purchase the machine because the expected rate of return exceeds the interest rate
B. Not purchase the machine because the interest rate exceeds the expected rate of return
C. Purchase the machine because the expected rate of return exceeds the interest rate
D. Purchase the machine because the interest rate exceeds the expected rate of return.

You are chairman of the board of a successful technology firm. there is a nominal federal corporate tax rate of 35 percent, yet the effective tax rate of the typical corporation is about 12.6%. your firm has been clever with use of transfer pricing and keeping money abroad and has barely paid any taxes over the last 5 years; during this same time period, profits were $28 billion. one member of the board feels that it is un-american to use various accounting strategies in order to avoid paying taxes. others feel that these are legal loopholes and corporations have a fiduciary responsibility to minimize taxes. one board member quoted what the ceo of exxon once said: “i’m not a u.s. company and i don’t make decisions based on what’s good for the u.s.” what are the alternatives? what are your recommendations? why do you recommend this course of action?

The total value of your portfolio is $10,000: $3,000 of it is invested in stock a and the remainder invested in stock b. stock a has a beta of 0.8; stock b has a beta of 1.2. the risk premium on the market portfolio is 8%; the risk-free rate is 2%. additional information on stocks a and b is provided below. return in each state state probability of state stock a stock b excellent 15% 15% 5% normal 50% 9% 7% poor 35% -15% 10% what are each stock’s expected return and the standard deviation? what are the expected return and the standard deviation of your portfolio? what is the beta of your portfolio? using capm, what is the expected return on the portfolio? given your answer above, would you buy, sell, or hold the portfolio?

Jewelry manufacturers produce a range of products such as rings, necklaces, bracelets, and brooches. what fundamental economic question are they addressing by offering this range of items?