If Dell can earn an annual interest rate of 4%, what is this float worth to Dell per dollar spent on inputs?

Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter7: Production, Costs, And Industry Structure
Section: Chapter Questions
Problem 39P: A firm is considering an investment that will earn a 6 rate of return. If it were to borrow the...
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Dell Computer makes its suppliers
wait 37 days on average to be paid
for their goods; however, Dell is paid
by its customers immediately. Thus,
Dell earns interest on this float, the
money that it is implicitly borrowing.
If Dell can earn an annual interest
rate of 4%, what is this float worth to
Dell per dollar spent on inputs?
Transcribed Image Text:Dell Computer makes its suppliers wait 37 days on average to be paid for their goods; however, Dell is paid by its customers immediately. Thus, Dell earns interest on this float, the money that it is implicitly borrowing. If Dell can earn an annual interest rate of 4%, what is this float worth to Dell per dollar spent on inputs?
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