Answer:The correct option is 'd': The interest rate.
Explanation:
According to Liquidity preference theory money is considered as 'liquid' meaning that liquidity preference is the demand for money.
According to this theory if our investments are more liquid then we ought to cash in for full value as cash is often accepted as most liquid asset.
Thus the liquidity of cash can be controlled by adjusting the interest rates as equilibrium in the money markets is achieved when the demand equals the supply.
Answer:
Leasing.
Explanation:
Find the present value of each and compare and choose the one with the lowest cost in present value terms.
<u>LEASE;</u>
Payments are in form of an annuity ;done using financial calculator (TI BA II plus)
PMT = -30,000
N ;duration = 4
I/Y = 10%
FV = 0
then CPT PV = -$95,095.96
<u>BUY</u>
Initial cost; (already in present value terms) = -$80,000
Annual maintenance(is an annuity); done using financial calculator (TI BA II plus)
PMT = -10,000
N ;duration = 4
I/Y = 10%
FV = 0
then CPT PV = -$31,698.65
Add PV of salvage value;
PV = FV/ (1+r)^4
PV = 20,000 /(1.10^4)
= 20,000/ 1.4641
= $13,660.26911
Overall PV of BUYING = (-80,000 -31,698.65 + 13,660.26911) = -$98,038.38
Therefore, leasing is a better option since the overall present value of costs is lower at $95,095.96 compared to that of buying at 98,038.38.
Answer:
An agency relationship
Explanation:
An agency relationship is one in which a party follows up for the benefit of and with the authority of another party. The head of a firm or organisation names or approves a specialist to follow up for the company benefit. Subsequently, she is answerable for the moves of the operator made in encouragement of her obligations or per the guidelines of the head. The specialist will connect with the third party on behalf of the company.
