It is not correct to say that a company ought to rent more capital "if the marginal output of capital is smaller than the rental rate of capital." Hence we conclude that the statement is FALSE.
This is further explained below.
<h3>What is
the marginal product?</h3>
Generally, In neoclassical economics, the marginal product is the change in output that occurs from utilizing one more unit of a particular input, assuming that the values of all other inputs remain constant. Marginal product is the difference in output that occurs when an extra unit of input is used.
In conclusion, if the MPK is greater than the rental rate of capital, then the only time a firm should employ more capital is when they need it.
This is the only time that a company should employ additional capital.
It is not correct to say that a company ought to rent more capital "if the marginal output of capital is smaller than the rental rate of capital."
Read more about the marginal product
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So, the interest rate will be undefined, we'll name the variable n.
4n(3000) = 510
(The 4 in the equation represents 4 years)
Multiply:
12000n = 510
We'll divide 510 by 12000:
n = 0.0425
The annual interest rate is 4.25%
Represents debt financing
Answer:
B) $665,000
Explanation:
Total pledges receivable are $700,000 but they should be reported minus the allowance for uncollectible pledges = $700,000 - 5% = $665,000
The journal entry to record the pledges receivable:
- Dr Pledges Receivable account 700,000
- Cr Allowance for Uncollectible Pledges account 35,000
- Contributions Revenue account 665,000
The allowance for uncollectible pledges account is a contra asset account that reduces the value of the pledges receivable account.