production for that product will increase.
MUx / MUy = Px / Py is the right answer
Answer:
Equals the foreign exchange rate minus the inflation rate.
Explanation:
Nominal rate of interest refers to the interest rate which does not account for rate of inflation.
It is expressed as
Nominal interest rate = Real interest rate + rate of inflation
Real interest rate is considered to be a better measure since it is adjusted for rate of inflation.
Foreign exchange rate refers to exchange rate between two currencies which is based upon inflation and interest rates prevailing in the respective countries.
Answer:
falls, the company is less likely to buy the equipment
Explanation:
There is an inverse relationship between interest or discount rate and present values of an investment,in that a higher interest rates brings about lower present values and vice versa.
Higher interest rate means that the cost of borrowing to fund the purchase of equipment is high, hence less profitable as the impact of higher interest expense on the income statement is a lower net income.
As a result, the company is less likely to go ahead with the planned purchase as the investment from a funding perspective is value-maximizing.
