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Jlenok [28]
3 years ago
15

c) A firm is considering an investment that will earn a 6% rate of return. If it were to borrow the money, it would have to pay

8% interest on the loan, but it currently has the cash, so it will not need to borrow. Should the firm make the investment? Show your work.
Mathematics
1 answer:
statuscvo [17]3 years ago
8 0

no the firm will not do the investment. because if the firm borrows the money & invest it in the project then the return will be 6% but the cost is 8%. so it will lose 2%.  

it also should not invest his own money on the project to get get the 6% return. because he could have loan the money to someone else & get 8% return. therefore his opportunity cost of investing the money is greater than the return.

therefore he should not make the investment .

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3 years ago
81 is 37.5% of what number?
laila [671]

Hi,

81 is 37.5% of 216.

"1. We assume, that the number 37.5 is 100% - because it's the output value of the task.  

2. We assume, that x is the value we are looking for.  

3. If 100% equals 37.5, so we can write it down as 100%=37.5.  

4. We know, that x% equals 81 of the output value, so we can write it down as x%=81.  

5. Now we have two simple equations:

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where left sides of both of them have the same units, and both right sides have the same units, so we can do something like that:

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6. Now we just have to solve the simple equation, and we will get the solution we are looking for.

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(100/x)*x=(37.5/81)*x       - we multiply both sides of the equation by x

100=0.46296296296296*x       - we divide both sides of the equation by (0.46296296296296) to get x

100/0.46296296296296=x  

216=x  

x=216                          "

Have a great day!

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